pension guarantor alters investment strategy
Tuesday, February 19, 2008
The Pension Benefit Guaranty Corp. said Monday that it had
adopted an investment policy designed to increase chances that
the government pension guarantor would be fully funded within 10
"The PBGC is responsible for the pensions of 1.3 million
Americans, but we don't currently have the resources to keep all
of our future commitments," Director Charles Millard said.
The agency, a privately funded corporation created by Congress
in 1974 to guarantee payment of basic pension benefits for about
44 million American workers and retirees, had an accumulated
deficit of $14 billion at the end of 2007.
"The new investment policy adopted by the PBGC board of
directors will better manage our invested assets," Millard said.
He added that although it should generate higher returns, its
broader diversification offered lower risk.
The strategy is pegged to give the agency a 57% likelihood of
full funding within 10 years, compared with a 19% chance under
the previous policy, he said.
The agency currently has about $55 billion to invest in the new
investment policy, under which 45% of assets will be allocated
to a diversified set of fixed-income investments. Another
45% will be allocated to diversified equity investment and 10%
to alternative investment classes.