Key members of Congress want experts to see whether the Pension Benefit Guaranty Corp. can handle its job.
Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, and Sen. Max Baucus, D-Mont., the most senior Democrat on the committee, have written to the U.S. Government Accountability Office to ask it to see whether the PBGC has the right structure and enough resources to oversee America’s defined benefit pension plans and to protect the workers and retirees who depend on the plans that fail.
Grassley and Baucus have asked the GAO to give them preliminary results by Jan. 31, 2007, before the Finance Committee begins the process of confirming the next permanent PBGC executive director.
The last permanent executive director, Bradley Belt, left the agency in May.
“The recently enacted Pension Protection Act of 2006 strengthened the long-term funding of defined benefit plans and provided legal clarity for hybrid plans in the future, yet we continue to read in the press of numerous companies terminating or freezing their defined benefit pension plans,” Grassley and Baucus write in their letter. “Whatever the future holds for defined benefit plans, these plans remain a key retirement security component for today’s older workers and retirees. We must be sure that the PBGC is both structured properly and performing properly to deal with these new challenges.”
The senators note in the letter that the PBGC’s 2005 data shows that more than 80% of claims ever filed against the PBGC have come since 2000, and that assets in pension plans trusteed by the PBGC increased to $56 billion in 2005, from $21 billion in 2000.
The PBGC already is paying benefits to 698,000 plan participants, and it will be responsible for paying benefits to 489,000 participants in trusteed plans once those participants qualify to receive benefits, the senators write.
“This rapid increase in participants, benefit payments and investments would be a challenge to any organization,” Grassley and Baucus write in their letter. “We are particularly concerned in how PBGC is handling this challenge and whether legislative changes are needed in PBGC’s structure, appropriations, or law.”
The GAO should look at whether the PBGC should be more independent from policymakers in the Treasury department, whether it can attract the staffing expertise it needs, and how recent changes made to the PBGC have affected its ability to perform, the senators write.