Pension Benefit Guaranty Corporation: Asset Management Needs Better Stewardship

GAO-11-271 Published: Jun 30, 2011. Publicly Released: Aug 01, 2011.
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The Pension Benefit Guaranty Corporation's (PBGC) insures the pension benefits of more than 44 million people. Since its inception in 1974, PBGC's assets have grown from about $34 million to almost $80 billion in 2010, largely through assets received in plan terminations. Despite significant swings in PBGC's investment history, there has been little focus on the extent to which it has met its investment goals, the nature of its investment policies or how they compare with best practices in the industry. GAO examined (1) how PBGC's investment objectives have changed over time and the outcomes associated with those changes, (2) the performance of PBGC's investments, and (3) how well PBGC's investment policies and operations comport with best practices in the industry. To address these questions, GAO reviewed PBGC's investment policy statements and operational procedures; analyzed data on investments; and interviewed PBGC officials, officials from several state pension plans and foreign pension insurers, and other experts.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Pension Benefit Guaranty Corporation To ensure proper stewardship of PBGC's assets and effective implementation of its investment policy, PBGC should develop a complete set of operating procedures and guidelines consistent with recognized best practices in industry and government.
Closed – Implemented
In June 2013, PBGC provided GAO with copies of updated policies and procedures relating to investment management and administration.
Pension Benefit Guaranty Corporation To ensure a disciplined and long-term approach to investment, PBGC and its board of directors should develop and maintain a comprehensive investment policy statement that provides clear organizational accountability, well-defined goals, and risk management parameters.
Closed – Implemented
PBGC and its board issued a more comprehensive investment policy statement that has incorporated many of the policy items that we identified as missing from previously issued policy statements. For example, the Policy establishes clear organizational accountabilities governing the various entities that work on behalf of the PBGC and provides well-defined goals and risk management parameters.

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