NEWS RELEASE

February 19, 2008
PR-08/02
For additional information:
Jason Hammersla
202-289-6700

Council applauds new PBGC investment strategy

WASHINGTON, D.C. — “The Pension Benefit Guaranty Corporation’s (PBGC) decision to diversify its invested assets is a welcome change in policy,” said Council President James A. Klein upon yesterday’s announcement by the PBGC. “We applaud the agency for taking a bold step that should improve PBGC’s financial health for the long term.”

This news validates a key recommendation of the September 2005, Promises to Keep: The True Nature of the Risks to the Defined Benefit Pension System, which explored the varying dimensions of the PBGC’s financial profile. The report argued that the agency’s financial standing has been hurt through its investment strategy; some of which is imposed by law and some of which the agency itself could modify. “The PBGC’s overall mix of all invested assets is overly conservative and heavily skewed toward fixed-income securities,” the report noted, indicating that the PBGC has not taken sufficient advantage of the higher long-term returns earned by equity investments.

“Pension policy should always be crafted by looking at the long view rather than based on a snapshot point in time,” Klein said. “This more appropriate strategy, increasing investment in equities, will fulfill this philosophy by generating greater returns down the road.”

Klein continued, “We continue to urge that PBGC use more market-based assumptions in the calculation of its assets and liabilities, for the sake of employers and employees who still rely on the traditional defined benefit pension system.”

To arrange an interview with a Council staff member, please contact Jason Hammersla, Council director, communications, at jhammersla@abcstaff.org or by phone at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council’s members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.