The Pension Benefit Guaranty Corp. decided earlier this year to cut the percentage of assets invested in bonds to 45%, from 75%.

The PBGC, the entity that insures U.S. defined benefit pension plans, now plans to put 45% of its assets in stocks and 10% in alternative asset classes, according to Peter Orszag, director of the Congressional Budget Office.

Orszag discusses the shift in a letter sent to Rep. George Miller, chairman of the House Education and Labor Committee.

The PBGC believes the shift will increase its investment returns and decrease the likelihood that taxpayers will have to cover its liabilities, Orszag writes.

“But the new strategy also increases the risk that PBGC will not have sufficient assets to cover retirees’ benefit payments when the economy and financial markets are weak,” Orszag writes.

If the PBGC keeps policies governing future premiums and benefits unchanged despite expectations of higher investment earnings, “taxpayers’ increased risk of substantial losses will be balanced by the higher expected returns that the new policy allows,” Orszag writes. “However, if the higher expected returns mean that premiums are reduced or benefits increased relative to what would otherwise occur, plan sponsors or beneficiaries will reap some of the benefits of the change in investment policy, but taxpayers will bear the added risks.”