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CCH® PENSION AND BENEFITS — 8/9/07

Senate leaders urge changes in PBGC governance

As the Senate Finance Committee prepares to consider the qualifications of President Bush’s nominee to head the Pension Benefit Guaranty Corporation (PBGC), the committee’s top lawmakers urged the Agency to change its governance structure to better protect pension holders. Charles E.F. Millard, nominated to serve as PBGC director, appeared before the Senate panel on July 25, 2007.

GAO study cited

Citing a new Government Accountability Office (GAO) study, Finance Committee Chairman Max Baucus (D-MT), and Sen. Chuck Grassley (R-IA), the panel’s ranking minority member, suggested that the PBGC’s board of directors be overhauled. The current board consists of the Secretaries of Labor, Treasury and Commerce. The GAO report – GAO Report-07-808 – determined the “board has limited time and resources to provide policy direction and oversight and has not established comprehensive written procedures and mechanisms to monitor PBGC operations.”

The report, which Baucus and Grassley requested (see CCH Pension Plan Guide Newsletter No. 1654, dated October 16, 2006), recommended that the board adopt corporate governance practices with formal guidelines establishing its roles and responsibilities. The GAO further recommended that the board be expanded to include individuals with technical expertise, including actuaries, and pension lawyers and academics.

“The Government Accountability Office points out significant shortcomings inherent in the current board structure of the Pension Benefit Guaranty Corporation,” Grassley said. “I especially want to see a clear-cut, independent line of communication established for the inspector general with the board of directors. Congress ought to consider other recommendations, too, as we continue our oversight and vigilance of the nation’s pension policies.”

Baucus remarked, “The GAO report reveals troubling practices that easily lead to confusion and inefficiency within this vital organization. It is clear that to successfully protect America’s retirees, the PBGC must implement strong operational oversight, streamline internal communication, and clarify administrative roles and responsibilities. The Finance Committee will consider a candidate for PBGC director, with these goals in mind.”

For more information on this and related topics, consult the CCH Pension Plan Guide.

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