The U.S. Pension Benefit Guaranty Corp. lost more than $3.1 billion on trust fund stock investments during the first 11 months of the last fiscal year.

The loss for the full fiscal year, which ended Sept. 30, probably was worse, because the PBGC invested a “significant portion” of its assets in mortgage-backed securities, Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, announced at a hearing today in San Francisco.

Democrats in Congress are criticizing a decision by the Bush administration to change the PBGC investment policy.

The new policy, recently approved by the PBGC board, calls for the agency to allocate fewer assets to U.S. Treasury securities and other fixed-income securities, and more assets to investments in categories such as real estate.

PBGC Director Charles Millard, recently testified before Congress that the new investment policy would not add any additional risk to the long-term stability of the trust fund.

Advocates of the new strategy say it should increase the trust fund’s overall returns. Critics say the changes could increase the risk that the PBGC trust fund will be unable to meet its obligation to back U.S. pension plans.

The House Education and Labor Committee plans to hold a hearing Friday in Washington on the PBGC investment strategy.

Millard is scheduled to testify at the hearing.

“The [PBGC stock] losses were only partially offset by modest gains in other investment classes,” Miller says in a statement.

The PBGC trust fund invests pension assets in order to pay benefits to participants enrolled in failed pension plans.

“At a time when Americans’ anxiety about their economic future is escalating, Millard’s testimony is vital to better understand the financial situation of the nation’s pension guarantor,” Miller says. “Now is the time to gather all the information we need in order to rescue the economy and help workers and retirees.”