Corporate governance weaknesses may be leaving the Pension Benefit Guaranty Corp. vulnerable to mismanagement.
Barbara Bovbjerg, an analyst with the U.S. Government Accountability Office, suggests that possibility in a review of governance structure at the PBGC, the government corporation that insures U.S. defined benefit pension plans.
The PBGC is a unit of the U.S. Department of Labor that is governed by a 3-member board. The directors are the secretaries of Labor, Commerce and the Treasury.
In the past, the board has sometimes gone for years without holding formal meetings, Bovbjerg writes.
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The board now meets twice a year, but the meetings are short, and the board members’ “board representatives” – officials at the assistant secretary level or higher who act as the cabinet secretaries’ liaisons to the PBGC–can provide little documentation of what happens during their meetings, Bovbjerg writes.
The cabinet secretaries each appoint one staff person to help the board representatives, but the board representatives and the staff people all have other responsibilities, Bovbjerg writes.
At one time, Bovbjerg notes, the secretary of Labor was both the chairman and administrator of the PBGC. Since the enactment of the Pension Protection Act of 2006, the administrator of the PBGC has been a director who must be confirmed by the Senate.
Perhaps, because of the Labor Department’s historic dominance over the PBGC, “board representatives from the Department of Commerce and the Treasury have often deferred to DOL on administrative matters and not generally questioned DOL on its actions,” Bovbjerg writes.