Board Rarely Meets to Guide Federal Pension Agency

The federal agency that insures the pensions of 40 million Americans has a well-appointed boardroom with a colorful wall chart showing its mounting financial problems. But the agency’s board of directors, made up of three Cabinet officials, hasn’t met there since 1982.

A review of Pension Benefit Guaranty Corp. records shows that the agency’s board, made up of the secretaries of labor, Treasury and commerce, has held one face-to-face meeting since 1982. The board is supposed to have “regular meetings” and to review the agency’s affairs, including policy matters affecting substantial numbers of employees, according to a study of the agency’s structure and bylaws that the PBGC commissioned.

James B. Lockhart, the agency’s executive director, has been warning that the federal insurance fund protecting retirees has rapidly growing financial problems that may require a multibillion-dollar, “S&L-style;” taxpayer bailout. The fund is made up of payments from medium-sized and large companies with pension plans, but if it ran out of money, taxpayers would have to make up the difference, Lockhart has said.

During his 3 1/2-year tenure, the PBGC’s board has met once in person, twice by phone and often transacted official business via messengers, who have carried resolutions requiring signatures from the seventh floor of PBGC headquarters to the Cabinet secretaries’ offices and back.

Before the written resolutions were sent, PBGC officials briefed senior staff from the departments of Labor, Treasury and Commerce who advise the Cabinet secretaries.

If the agency’s board had been more active, some pension experts said, the PBGC might have pushed through legislation it had sought to prohibit struggling companies from increasing retirement promises that the federal pension insurance fund would have to fulfill if the businesses don’t survive. The legislation, which died in Congress, also would have helped the PBGC reduce its losses by giving it a stronger position as a creditor when companies file for bankruptcy court protection.

Several pension experts said more active board involvement over the years also might have helped the PBGC straighten out its internal financial affairs faster in the early to mid-1980s.

“If the board had met more often and been more involved, at a minimum the PBGC would probably have greater control over their finances,” said Mark Ugoretz, president of the ERISA Industry Committee, a Washington-based lobby group that represents major employers with pension plans.

As chair of the PBGC’s board of directors, the labor secretary schedules board meetings, whether they are in person or by phone. Labor Secretary Lynn Martin chaired the only face-to-face meeting in nearly a decade last December. The gathering, to approve the PBGC’s annual report and consider legislative proposals, was held at the Labor Department, rather than at the PBGC. Two of the three Cabinet secretaries attended, and another official represented Treasury Secretary Nicholas F. Brady.

“It was Secretary Martin’s view that the board should meet more regularly,” said Labor Department spokesman Steve Hoffman.

The board has not met face-to-face since and has no meetings scheduled.

Former PBGC executive director Kathleen Utgoff, who served from 1985 to 1989, a period when the board held no face-to-face meetings, said the gatherings would have served no useful purpose, in part because people often are reluctant to discuss problems in a formal meeting setting.