Annual Performance Report
The PBGC’s strategic plan for fiscal years 2006-2011 reflects its commitment to improving the pension insurance program.  Specifically, the PBGC’s goals are to:

1. safeguard the federal pension insurance system for the benefit of participants, plan sponsors, and other stakeholders;
2. provide exceptional service to customers and stakeholders; and
3. exercise effective and efficient stewardship of the PBGC resources.

In carrying out its mission, the PBGC interacts with a variety of customers and stakeholders with an interest in a strong and effective pension system.  They include beneficiaries in terminated pension plans, participants in ongoing pension plans that the PBGC insures, the employers that pay premiums, and the lawmakers and policymakers who oversee the federal insurance programs.

The PBGC manages performance by monitoring and mitigating pension risk, examining its service to these customers and stakeholders, and strategically allocating its resources to programs and activities that support and demonstrate achievement of the PBGC’s mission and goals.  Performance measures help examine the effectiveness of the PBGC’s service improvements, many of which are now provided via Web-based services.

The PBGC’s strategic goals and objectives are published on the PBGC’s Web site at www.pbgc.gov.  The performance results for FY 2006 are detailed below.  These items meet the annual reporting requirement of the Government Performance and Results Act.

Overview of the PBGC’s Performance Measures

The PBGC’s 2006 performance measures either rose or remained constant in nearly all areas compared to those reported for 2005, despite the occurrence of several events expected to have a negative effect on sponsors’ and participants’ views of the PBGC’s operations.  These included the start of mandatory premium e-filing for large plans, the workload generated by a significant increase in participants in newly trusteed plans (many of whom had benefits adjusted downward from company levels to reflect ERISA guaranteed maximum benefit payments), and ongoing reported deficits in both the PBGC’s single-employer and multiemployer programs.
The PBGC developed new performance measures after enactment of the Pension Protection Act that comprise activities required to implement the new premium reforms.  These measures are listed in Chart 1 under the strategic goal to safeguard the pension insurance system.

 

Chart 1: The PBGC performance measures, targets and results.

The following sections discuss the performance measures for each of the PBGC’s three goals in more detail.

ACHIEVING PERFORMANCE TARGETS
Safeguard the Pension Insurance System for the Benefit of Participants, Plan Sponsors, and Other Stakeholders

The PBGC engages in a number of activities to safeguard the pension insurance system for the benefit of insured pension plan participants, insured plan sponsors, and other stakeholders.  These activities include plan risk assessments, plan monitoring and negotiation and litigation to limit risk exposure and losses to participants and the PBGC.  In 2005, the PBGC stepped up its efforts to safeguard the pension insurance system, and continued that focus in 2006.  Chart 2 depicts the scale of these activities, as well as the continuing challenges.  While the number of controlled groups monitored rose only slightly and plans monitored fell during 2006, the number of active bankruptcy cases rose significantly.  In addition, the amount of pension underfunding reported by companies under section 4010 of the Employee Retirement Income Security Act decreased to $340 billion from $355 billion in 2005.

One of the PBGC's noteworthy successes in 2006 was its intervention in avoiding losses and obtaining recoveries in bankruptcy cases involving the termination of large, poorly funded pension plans.  In eight large bankruptcy cases resolved in 2006, the PBGC avoided or mitigated losses of nearly $4 billion from an exposure approaching $13 billion in unfunded benefit liabilities.

Proposed amendments to ERISA were included in the President's FY 2006 Budget to Congress.  The PBGC actively supported the Administration's comprehensive pension reform proposal through congressional testimony, news releases, speeches and interviews.  On February 8, 2006, the Deficit Reduction Act of 2005 was enacted, which increased flat-rate premiums for single-employer and multiemployer plans and established a termination premium for certain single-employer plans.  On August 17, 2006, the President signed into law the Pension Protection Act, which includes new plan funding rules, new provisions for pension plan transparency, and additional reforms to the premium structure for defined benefit plans.  The PBGC plans to publish regulations in 2007 implementing the flat-rate premium increase, the variable-rate premium changes, and the new termination premium requirement.

ACHIEVING PERFORMANCE TARGETS

Provide Exceptional Service to Customers and Stakeholders
The PBGC measures customer satisfaction using the American Customer Satisfaction Index (ASCI), a nationally recognized survey instrument that is used by both federal and private sector entities.  The PBGC obtains ACSI scores for three primary customer groups–premium filers, plan participants, and others accessing the PBGC's Web site.  The PBGC uses survey results to identify the impact of specific service components on customer satisfaction, to monitor customer expectations, and to allocate resources to meet customer needs.  As the PBGC expands its e-business services, tracking the satisfaction of customers and stakeholders as they use the online services becomes increasingly important in understanding and meeting customer expectations.

Survey of Premium Filers

The PBGC significantly improved its performance in a number of important areas in 2005.  In spite of those improvements, overall customer satisfaction among practitioners decreased by one point.  In order to determine whether previously unmeasured factors were having an effect on the overall ratings, the PBGC included questions on policy and legislation in the 2006 Premium Filer survey.  Though these areas are largely outside of the PBGC’s control, they were thought to have a significant impact on customer views and expectations of the PBGC's performance.  With the addition of these new questions, a new baseline was established for premium filers.  The lowest score was in the new component, policy and legislation, suggesting that these factors did have a negative effect on overall premium filer satisfaction ratings.  Premium filers' primary concerns are the long-term viability of the pension insurance system and long-term financial outlook of the PBGC.
 
The PBGC also changed the name of the survey from Pension Practitioner Survey to Premium Filer Survey to reflect more closely the characteristics of the surveyed population.  This year’s premium filer score was 68 out of 100, a relatively high score compared with other regulatory reporting agencies and unchanged from 2005 even though the PBGC had implemented mandatory e-filing for large plans in 2006.  Maintenance of the score despite mandatory e-filing had been a primary objective and was achieved through additional customer outreach, expansion of support programs and introduction of Web-based seminars that were well attended.  The surveyed components with the highest impact on customer satisfaction were written communication, policy and legislation, and premium filing.  Premium filers found the filing process easy but wanted faster refunds for overpayment of premiums.  The PBGC has already shortened the average time for refunds and waiver requests from 39 days in 2005 to 22 days in 2006.  Other customer service improvements are expected with the implementation of a new premium accounting system in 2008.

Survey of Retirees Receiving the PBGC Benefit Payments and Other Participants

The 2006 ACSI score for retirees who arecurrently receiving benefits from the PBGCwas 85, one point higher than the target of84. The retiree ACSI score remains amongthe highest in government. Retirees feel that the PBGC is excelling at providing their benefits in a timely, efficient, and accu-rate manner. For participants who contacted the PBGC via its toll freetelephone number, the score was 75 - lowerthan the past three years and breaking afour-year upward trend as shown in Chart 3. Though the score continued to be among the highest forgovernment and exceeded the 2005 government average of 71, scores dropped in written communication andconcern resolution. The PBGC had already targeted improvements in communication, specificallycommunications about complexities in benefit determinations for participants of recently terminatedpension plans. Recent improvements in technology have also paved the way for the PBGC to instituteenhancements to its call monitoring program. Participants demonstrated satisfaction with recentimprovements in the benefit estimates area, scoring it the highest.

Survey of Web Site Users

The 2006 ACSI score for pension practitioners who visited the PBGC's Web site rose to 73, seven pointshigher than the 2005 score of 66, but two points less than the target of 75. Much of the increase isattributable to the extensively reorganized PBGC Web site launched at the end of 2005. The PBGCexpected the improvements to make navigation and search easier but pension practitioners in particular,were least satisfied with navigation and search.

To help users quickly find information and guidance, the PBGC established a Web page in 2006 with linksto regulations, white papers, and discussion papers. The PBGC also continued to improve its onlineservices for premium filing and payment in 2006. My Plan Administration Account (MyPAA), which wasimplemented in 2004, now provides several e-filing options that facilitate premium filers compliance withthe mandatory e-filing requirement that became effective in 2006. The PBGC will continue publicizing itse-filing services through Webcasts, conference demonstrations, mailings and newsletters. Efforts are alsounderway to improve the premium accounting system which is key to supporting future improvements to practitioner online customer services.

The 2006 ACSI score for participants visiting the Web site was 72, seven points higher than the 2005 scoreof 65 and twelve points higher than the baseline score of 60 in 2004. This exceeded the 2006 target of 67. The PBGC attributes the significant increase to the improved Web site launched at the end of 2005. ThePBGC continues to improve My Pension Benefit Account (My PBA) online services. Plannedimprovements include a service that allows participants to request benefit estimates.

Exercise efficient and effective stewardship of the PBGC resources

The PBGC strives to manage its resources efficiently and effectively. Performance targets are aligned withthe PBGC's strategic goals to achieve desired results. The PBGC continued to focus on sustainingachievements in the Presidents's Management Agenda objectives and pursuing business practices thatpromote organizational excellence. At the end of FY 2006, the PBGC's cost per participant in trusteedplans was $203, up from $194 in 2005. The target for FY 2006 was $199. This slight increase results froma difference in the number of participants projected at the beginning of the year versus the number at theend of the year--a factor that varies with the number of plans and participants in the inventory.

President's Management Agenda

The PBGC goals align with the President's Management Agenda (PMA), which focuses on improvingservices to customers and having a results-oriented federal government. Integrating the spirit of PMA in itsstrategic plans resulted in the PBGC achieving the following in 2006:

• Strategic Management of Human Capital: The PBGC continued to implement its Human CapitalStrategic Plan, focusing on recruiting and retaining top talent, developing emerging leaders forsuccession planning, promoting a results-oriented culture, developing information technology skills,and maximizing the use of information technology resources. A 5-year outreach recruitment planwas initiated in FY 2006, and management performance plans were improved to align performanceexpectations with organizational goals. The PBGC received the 2006 Optimas Award fromWorkforce Management magazine in the Managing Change category, which cited the PBGC'sProject Management Curriculum. In 2006, the Project Management Curriculum continued with 23project managers earning Masters Certificates in Project Management. The Project ManagementCurriculum includes training in project initiation, planning, executing, monitoring, controlling,closing, and professional and social responsibility, determined by OPM and the ProjectManagement Institute to be necessary for demonstrating knowledge and skill in effective projectmanagement. In addition, the PBGC was the first small agency and one of four agencies across thefederal government to implement the Electronic Official Personnel Folder (eOPF), a paperless personnel file initiative.

The PBGC's formal succession management program, Leaders Growing Leaders (LGL), is midway through its third two-year cycle with 7 candidates. To date, 15 candidates have graduated from the two-year program. In addition, the PBGC offers a robust formal mentoring program to its employees at all levels. Roughly one-quarter of the PBGC's workforce has participated in the program.

The PBGC conducted the Gallup Q12 Employee Engagement Survey again in 2006, and is now in the 58th percentile of the U.S. overall working population. The most beneficial part of the process is when employees and managers work together to develop very specfic roadmaps for improving engagement in the local work unit.

• Competitive Sourcing: As a Government Corporation, the PBGC is not subject to the FAIR Actcompetitive sourcing process. For many years though, the PBGC has been a government leader inoutsourcing certain of its services. The PBGC uses private sector entities for a wide variety ofsupport functions, including financial advice, benefit administration, information technology,actuarial, office services, and legal services. The PBGC's commitment towards a competitive-basedwork environment is reflected in the PBGC's budget where two-thirds of its funds are allocated tocontracts employing some 1,400 contract staff to supplement the PBGC's 870 Federal staff.
• Improved Financial Management: For the 14th consecutive year the PBGC received an unqualified"clean" audit opinion from its independent financial auditor. The interdepartmental InternalControls Committee, established in 2005, oversaw the documentation and testing of key internalcontrol activities, including testing of controls over financial reporting, general informationtechnology controls, and entity-wide controls. The testing helps management to support the"Federal Managers Financial Integrity Act" assertion that the PBGC has an effective internal controlsystem.
• Expanded Electronic Government: The PBGC continued to improve its Web site and expandedWeb-based services for pension plan administrators and trusteed plan participants, as mentioned inthe foregoing section on providing exceptional service to customers and stakeholders. Participantscan use the PBGC's online services to apply for benefits, designate a beneficiary, submit a requestfor a benefit estimate, make address changes and request electronic funds deposit and they will soonbe able to calculate benefit estimates online. Information for individual trusteed plans is available toparticipants in those plans. In addition, pension practitioners and plan sponsors can file and pay premiums electronically as well as file important compliance documents such as e-4010 filings. In2006, the PBGC established a Web page with links to regulations, white papers, and discussionpapers to enable customers and stakeholders to quickly find information and guidance.
• Budget and Performance Integration: The PBGC has continued to refine its strategic planning andbudget processes to ensure alignment with its mission and to support achievement of performancegoals. Through the electronic Corporate Performance Reporting System (CPRS), to whichsignificant progress was made in automating performance measurement information in 2006, thePBGC fosters transparency in corporate-wide information sharing and accountability.

PROGRAM EVALUATION

• The General Accounting Office issued a report entitled "Opportunities Exist to Further Improvethe Transparency of the PBGC's Financial Disclosures" in March 2006. As a result, the PBGC nowpublishes its interest rate methodology on its Web site (www.PBGC.gov) and information todetermine the financial impact of terminated plans on the PBGC. These efforts enhance thetransparency of the PBGC's operations for its stakeholders and the public.
• The PBGC had its first Program Assessment Rating Tool (PART) review by the office ofManagement and Budget (OMB) in 2004. OMB rated the PBGC's program as "moderatelyeffective" overall with a score of 79. The PBGC received scores of 80 and higher (fully effective)for the three assessed areas of Program Purpose and Design, Strategic Planning, and Program Management. The Program Results/Accountability area scored 75. OMB's PART analysis reflected its view that thePBGC performed well in areas that are under its control, but that a rating of "effective" was notpossible for the Program Results/Accountability area unless and until the statutory mandate underwhich the PBGC operates is modified to strengthen pension plan funding rules and the premiumstructure is altered to more accurately reflect the risks posed by individual plans. In 2006, thePresident signed the Deficit Reduction Act and the Pension Protection Act, which address, in part,concerns regarding the PBGC's statutory environment identified as part of the 2004 PARTassessment.
• The PBGC uses American Customer Satisfaction Index survey methodology to receive feedbackfrom its customers. The feedback is used to evaluate the effectiveness of services to customers andstakeholders. The ACSI provides a means for the PBGC to compare its results with those of othergovernment and private organizations, to continue to improve performance in high value areas toour customers, and to benchmark best practices. Evaluation of the survey responses results in service innovations and process improvements that benefit the PBGC customers.
• The PBGC's Office of the Inspector General conducted several audits and evaluations of thePBGC's governance, financial management, information technology, procurement and contracting,and program performance during FY 2006. Reports included the annual audit of the PBGC'sfinancial statements; a review of the PBGC's costs associated with an interagency developmenteffort; and evaluations of the PBGC's compliance with the Federal Information SecurityManagement Act, policies established for the use of various electronic communication devices, andpolicies governing the PBGC's resolution of pension settlement claims. The PBGC has acooperative relationship with the OIG and is working to address the issues raised in its reports.

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