US - Lawmakers introduced new legislation yesterday that would expand the board of the Pension Benefit Guaranty Corp. and prevent the director from participating in the manager selection process.
The legislation calls for stricter oversight of the PBGC. It expands the board from three to seven members, staggers the board terms and requires the board to meet at least four times a year.
The bill also requires the advisory council, general counsel and inspector counsel to have direct access to the board.
The Pension Benefit Guaranty Corporation Governance Improvement Act was introduced by senators Herb Kohl, Michael Bennet, Claire McCaskill and Russ Feingold.
The bill comes on the heels of a report issued yesterday by the Brookings Institute saying the PBGC, with a deficit of US$33bn, is "chronically underfunded".
The Brookings report said: "One step towards remedying the PBGC's chronic problems would be to increase the effectiveness of its board of directors... Its three-person board format and sparse meeting schedule is unusual."
The PBGC board consists of the secretaries of Labor, Treasury and Commerce, and is not required to meet regularly.
Kohl said: "Decisions made by PBGC management and a lack of oversight and governance by previous PBGC Boards have contributed to the agency's financial situation. The (Government Accountability Office) has indicated for years that the PBGC board members do not have enough time or resources to provide the necessary policy direction and oversight."
The bill is partly a result of allegations of mismanagement by former director Charles Millard, who was accused of allegedly shifting the PBGC's assets into riskier investments and possibly had improper contact with money managers hired by the agency. (Global Pensions; July 30, 2009)
The legislation "prohibits the PBGC board of directors and director from directly serving on procurement technical evaluation panels and disqualifies them from participating in any matter that may have or appear to have a conflict of interest".
PBGC spokesman Marc Hopkins declined to comment.
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.