Tuesday, August 19, 2008
Summary of the report:
The Pension Benefit Guaranty Corporation (PBGC) insures the retirement future of over 44 million people. As a federal guarantor of private defined benefit plans, PBGC finances its operations through insurance premiums, investment income, and funds from terminated pension plans. PBGC is governed by a board of directors comprised of the Secretaries of Commerce, Labor, and Treasury, who are responsible for providing policy direction and oversight but often rely on board representatives. In 2004, PBGC began reviewing its investment policy biennially and recently decided to broaden the range of asset classes in which it invests.
GAO reviewed PBGC’s procedures for developing and implementing its investment policies, and examined PBGC’s most recent investment policy. To address these issues, GAO reviewed and analyzed PBGC policies and data, assessed the analysis informing the recent policy change, and interviewed agency officials and other experts.
What GAO Recommends
GAO recommends (1) improvements to the way that PBGC’s board monitors progress in achieving investment policy goals, and (2) additional analyses on the new investment policy. In response, PBGC’s board stated its informal guidance is appropriate oversight. GAO states this type of guidance is not strong enough for investing $68 billion. Further, PBGC is conducting additional analysis on the new policy.