Is the Pension Benefit Guaranty Corporation headed for a federal bailout?
It certainly could be, although former PBGC Executive Director Bradley Belt says a rescue could be avoided provided three changes are put in place:
An overhaul to the agency’s "irrational" approach to setting premiums, a change in its governance, and so long as it’s given greater latitude to pursue what it believes are the best solutions to its problems.
The second is to take the PBGC board out of the hands of the secretaries of Labor, Treasury and Commerce and instead install “financial market and pension experts drawn from both parties and business and labor,” so that fiduciary conflicts are eliminated and policies don’t change with every election.
The third solution is to provide “broader authority to work with both distressed corporate sponsors of single-employer plans and contributing employers and trustees of multiemployer plans to craft financial solutions to address specific problems and challenges.”
While Belt acknowledges that even the implementation of all three of these steps would still not solve all the agency’s problems, it “might be enough to avoid making the PBGC the next bailout.”
Belt, the Washington-based vice chairman of Orchard Global Asset Management, an alternative asset management firm, served as executive director of the PBGC from April 2004 to May 2006.