U.S. Department of Labor
Julie A. Su, Acting Secretary of Labor
Lisa M. Gomez, Assistant Secretary, Employee Benefits Security Administration (EBSA)
Ali Khawar, Principal Deputy Assistant Secretary, EBSA
John Warner, Special Assistant in the Office of the Assistant Secretary, EBSA
Gwen McCullough, Special Assistant in the Office of the Assistant Secretary, EBSA
Nicole Swift, Division Chief, EBSA
Ashley Piatt, Employee Benefits Law Specialist, EBSA
Janelle Leung-Tat, Employee Benefits Law Specialist, EBSA
U.S. Department of the Treasury
Janet L. Yellen, Secretary of the Treasury
Laurie Schaffer, Acting Assistant Secretary for Financial Institutions
W. Moses Kim, Director, Office of Financial Institutions Policy
Jong Ho Hwang, Senior Policy Advisor, Office of Financial Institutions Policy
U.S. Department of Commerce
Don D. Graves, Deputy Secretary of Commerce
Sam Marullo, Counselor to the Secretary
Julia Murphy, Special Assistant to the Deputy Secretary
Julia Beckhusen, PhD, Senior Economist
Pension Benefit Guaranty Corporation
Gordon Hartogensis, Director, Pension Benefit Guaranty Corporation
Kristin Chapman, Chief of Staff
Paul Chalmers, Deputy General Counsel for General Law and Operations
Ann Orr, Chief Policy Officer
Patricia Kelly, Chief Financial Officer
John Greenberg, Chief Investment Officer
Alice Maroni, Chief Management Officer
John Hanley, Chief of Negotiations and Restructuring
Bob Scherer, Chief Information Officer
Michael Rae, Deputy Chief Policy Officer
David Foley, Chief of Benefits Administration
PBGC Office of Inspector General
Nick Novak, Inspector General
PBGC Office of the Participant and Plan Sponsor Advocate
Connie Donovan, Participant and Plan Sponsor Advocate
Camille Castro, Senior Associate Participant and Plan Sponsor Advocate
Emily Spreiser, Associate Participant and Plan Sponsor Advocate
The Chair called the meeting to order and welcomed the attendees. She noted that this is the first Board meeting held in person since 2020 and expressed her appreciation for those in attendance. The Chair asked for approval of the minutes from the January 29, 2024, Board meeting. The Board approved the meeting minutes by voice vote.
Noting that this is PBGC Director Gordon Hartogensis’s final Board meeting before his term expires, the Chair thanked the Director for his accomplishments. She observed that starting a new program is never easy, especially under tight deadlines, but the Director set up PBGC’s Special Financial Assistance (SFA) program with grace and thoughtfulness. Secretary Yellen thanked the Director for his efforts, noting that millions of workers and their families depend on PBGC, and they could not have asked for a better person to protect their interests. Deputy Secretary Graves also thanked the Director for his work to protect pensions, particularly on the SFA program and in making the Small Asset Manager Program permanent. The Board presented the Director with a signed copy of Board Resolution 2024-5, which expresses the Board’s “sincere gratitude” for “his hard work and dedication to public service.”
The Chair stated that she understood that a productive meeting occurred between PBGC, Labor and Treasury staff, and the Office of the Participant and Plan Sponsor Advocate. The meeting participants addressed each of the Advocate’s recommendations from her 2023 report. The Chair stated that the work to address the Advocate’s recommendations would continue.
The Chair recognized Director Hartogensis. The Director thanked the Chair and the Board for their kind remarks and for the resolution.
Director Hartogensis reported that both PBGC’s single and multiemployer programs are stronger now than they ever have been. Both have positive net positions, and the Government Accountability Office removed both from its list of high-risk programs, the first time that has happened since 2003. PBGC’s multiemployer program had faced a solvency crisis with so many large multiemployer plans approaching insolvency. Thanks to the SFA program, PBGC is providing financial relief to struggling eligible plans, allowing them to pay full benefits.
The Director next discussed the state of PBGC’s Information Technology program. Over the past five years, PBGC has substantially improved its IT security and modernized its legacy systems. PBGC closed 80 audit recommendations and remediated two significant deficiencies, leading to PBGC receiving “effective” FISMA ratings in each of the last three years.
While all of this was occurring, the Director reported, PBGC was ranked in the top five of small agencies in the Best Places to Work in the Federal Government, ranking number one in 2021.
The Director next updated the Board on PBGC’s investments. He reported that PBGC’s investment program continues to provide strong returns, and the total return on PBGC’s Trust Fund surpassed its benchmark through the first five months of the fiscal year.
The Chair congratulated the agency for resolving many of its IT audit recommendations and for the positive audit results. The Chair asked the Director about PBGC’s missing participant web portal, and the Director explained how the portal functions.
The Director next provided an update on the SFA program. The Director reviewed the status of SFA applications approved, under review, and withdrawn. He also discussed the status of PBGC’s independent death audits for both new applications and plans that have already received SFA. He reported that Central States signed a settlement agreement with the Department of Justice on April 8, 2024, and repaid $126.5 million of SFA money the same day. PBGC expects to begin receiving repayments from other plans over the next few months.
In response to the Chair’s question about the timeline for providing instructions to plans regarding the independent death audits, the Director described the process for instructing plans about the death audits. He also noted that new SFA applicant plans may elect to receive a pre-application death audit from PBGC to smooth the application process.
Secretary Yellen thanked the Director for his work to implement the independent death audits. Deputy Secretary Graves asked the Director whether he expects withdrawn applications to be refiled, and the Director responded that most, if not all, will likely be refiled. Deputy Secretary Graves asked if PBGC had an estimate of the percentage by which SFA payments to date would need to be reduced after excluding any deceased participants that were inadvertently included. The Director responded that the number would vary by plan but would be very low. For Central States, the number was 0.35% of the total SFA amount paid to Central States.
The Chair next recognized John Greenberg, PBGC’s Chief Investment Officer, to provide an update on PBGC’s Smaller Asset Manager Program. Mr. Greenberg described the program’s history and stated that participating asset managers had performed well. PBGC made the program permanent in 2022 and has implemented changes to expand the program, including awarding longer-term contracts and expanding the types of assets managed by program participants. After the last round of procurements, there are six managers in the program.
Secretary Yellen asked how compensation for these managers is determined. Mr. Greenberg responded that the procurement process determines compensation, but generally tied to assets under management. The Chair inquired about the amount of assets managed and the performance of the asset managers. Mr. Greenberg replied that overall, the assets assigned to participating firms have increased and they have been performing well.
The Chair and Deputy Secretary Graves expressed appreciation for the diversity of the asset managers.
Mr. Greenberg then reported on the cash reserve research PBGC conducted with respect to its investment policy. Mr. Greenberg stated that while PBGC’s research showed that its approach to the size of its cash reserve is conservative relative to its peers, this did not negatively impact its investment performance. He concluded that no changes are needed now but the Board may want to consider the matter the next time it evaluates the Investment Policy Statement in 2025.
As there were no further questions, the Chair and the Board Members thanked Director Hartogensis and all who participated and adjourned the meeting.
AGENDA
MEETING OF THE BOARD OF DIRECTORS OF
THE PENSION BENEFIT GUARANTY CORPORATION (PBGC)
Monday, April 22, 2024
9:30 a.m. – 10:15 a.m.
- Introduction by Acting Secretary Su and Approval of the January 29 Board meeting minutes
- Director’s Report
- Special Financial Assistance Program
- Smaller Asset Manager Program
- Investment Policy Statement - Cash Reserve Research