Director's Transmittal Letter

I am pleased to transmit the Pension Benefit Guaranty Corporation’s Annual Management Report for fiscal year 2008.  This report includes PBGC’s financial statements, the transmittal letter of PBGC’s Inspector General, and the independent auditor’s combined report on the Corporation’s financial statements, internal controls, and compliance with laws and regulations.  Also included is the Corporation’s Annual Performance Report as required under the Government Performance and Results Act.

Under Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) PBGC insures, subject to statutory limits, pension benefits of participants in covered private defined benefit pension plans in the United States.  The Corporation’s goals include safeguarding the federal pension insurance system for the benefit of participants, plan sponsors, and other stakeholders, providing exceptional service to customers and stakeholders, and exercising effective and efficient stewardship of PBGC resources.

During FY 2008, PBGC made substantial progress toward these goals.  The Corporation adopted a more diversified investment policy designed to increase the likelihood that PBGC will meet its obligations over time.  PBGC has taken a slow and prudent approach to the implementation of the policy.  In 2008, PBGC had a return on investment of -6.5%, even during this time of significant market turmoil.  Even with this loss, PBGC reduced its deficit by more than $2.9 billion, due to prudent stewardship and diligent and assertive negotiations in bankruptcy proceedings, as well as decreases in the value of our liabilities, and other factors.

The agency also improved its Information Technology planning, budgeting, development and management, getting PBGC off the OMB Management Watch List.  We implemented a new performance management program, aligning staff accountability with the Corporation’s strategic goals.  PBGC scored improvements in its efficiency and effectiveness in serving plan participants, retirees, and premium filers.  And the agency finalized regulations implementing the premium reform provisions of the Pension Protection Act of 2006 and the Deficit Reduction Act of 2005.

The Annual Performance Report notes that PBGC has incorporated the principles of the President’s Management Agenda into its strategic planning process and achieved successes in the areas of strategic management of human capital, commercial services management, improved financial management, and expanded E-Government.
 
The financial and performance data included in this report are reliable and complete.  PBGC’s independent auditor gave the Corporation its 16th consecutive unqualified audit opinion on its financial statements, and its 5th consecutive unqualified opinion on management’s assertion regarding the effectiveness of PBGC’s internal controls. 

The independent auditor’s reports are included within this Annual Management Report.  As further discussed in these reports, and in the Management Representation Letter and Chief Financial Officer’s Letter, the independent auditor reported on the status of three significant deficiencies and PBGC’s progress made on prior year reportable conditions.  PBGC is committed to addressing the recommendations in the areas of information security, access controls, and financial management integration. 

Sincerely,

Charles E. F. Millard
Director
November 12, 2008                                                             

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