U.S. Department of Labor
Julie A. Su, Acting Secretary of Labor and Chair, PBGC Board of Directors
Lisa M. Gomez, Assistant Secretary, Employee Benefits Security Administration (EBSA)
Ali Khawar, Principal Deputy Assistant Secretary, EBSA
John Warner, Special Assistant, EBSA
Nicole Swift, Division Chief, EBSA
Ashley Piatt, Employee Benefits Law Specialist, EBSA
Janelle Leung-Tat, Employee Benefits Law Specialist, EBSA
U.S. Department of the Treasury
Janet L. Yellen, Secretary of the Treasury
Laurie Schaffer, Acting Assistant Secretary for Financial Institutions
W. Moses Kim, Director, Office of Financial Institutions Policy
Jeanette Quick, Deputy Assistant Secretary for Financial Institutions Policy
Jong Ho Hwang, Senior Policy Advisor, Office of Financial Institutions Policy
Kyle Brown, Deputy Benefits Tax Counsel, Office of Benefits Tax Counsel
U.S. Department of Commerce
Jed Kolko, Under Secretary of Commerce for Economic Affairs
Sam Marullo, Counselor to the Secretary
Julia Beckhusen, Senior Economist, U.S. Census Bureau
Pension Benefit Guaranty Corporation
Gordon Hartogensis, Director, Pension Benefit Guaranty Corporation
Karen L. Morris, General Counsel and Secretary to the Board
Kristin Chapman, Chief of Staff
Patricia Kelly, Chief Financial Officer
Ann Orr, Chief Policy Officer
John Hanley, Chief of Negotiations and Restructuring
Robert Scherer, Chief Information Officer
David Foley, Chief of Benefits Administration
Alice Maroni, Chief Management Officer
Michael Rae, Deputy Chief Policy Officer
Latreece Wade, Risk Management Officer
PBGC Office of Inspector General
Nick Novak, Inspector General
Brooke Holmes, Deputy Inspector General
PBGC Office of the Participant and Plan Sponsor Advocate
Constance Donovan, Participant and Plan Sponsor Advocate
Camille Castro, Senior Associate Participant and Plan Sponsor Advocate
Emily Spreiser, Associate Participant and Plan Sponsor Advocate
The Chair called the virtual meeting to order, welcomed the attendees to the first PBGC Board meeting of 2024, and reviewed the agenda. The Chair asked for approval of the minutes from the September 28, 2023, Board meeting. The Board approved the meeting minutes by voice vote. The Chair recognized PBGC Director Gordon Hartogensis.
The Director provided an update on the financial performance of PBGC’s programs during the fourth quarter of Fiscal Year 2023, highlighting the effective hedging of assets and liabilities.
The Director reported on the Special Financial Assistance (SFA) program, noting the agency’s approval of over $53.6 billion in SFA payments to multiemployer plans covering over 775,000 workers, retirees, and beneficiaries. The Director reviewed the status of SFA applications approved, under review, and withdrawn.
Next, the Director provided a summary of the Smaller Asset Managers Program (SAMP), noting that Board’s 2022 approval to make the SAMP an ongoing component of PBGC’s investment program.
The Chair thanked the Director and asked about the impact of the death audit process on the SFA review process. The Director provided a timeline of PBGC’s implementation of the death audit process, which began in November 2023, and emphasized that PBGC does not expect this new process to create meaningful delays. In response to the Chair’s question about when the PBGC SFA filing portal will reopen, the Director advised that he expected the portal to open in February 2024 to accept 5 SFA applications.
Secretary Yellen expressed appreciation for the success of PBGC’s liability hedging strategy and asked whether the decrease in liabilities was the result of higher interest rates. The Director confirmed that higher interest rates caused liabilities to decrease. Under Secretary Kolko thanked the Director.
The Chair recognized PBGC Risk Management Officer Latreece Wade, who reported on PBGC’s Enterprise Risk Management Program. Ms. Wade highlighted the strength of PBGC’s risk culture, with risk management embedded in agency programs and processes throughout the agency. The agency conducts an annual risk assessment, and Ms. Wade described the role of the Risk Management Council (RMC) in evaluating the probability and impact of all identified risks. The RMC uses this information to develop a Risk Profile for significant risks, including mitigation strategies. In 2023, the General Accountability Office (GAO) removed the PBGC insurance programs from GAO’s High-Risk List due to the improvement of both the financial condition and the outlook for the single-employer and multiemployer programs. Ms. Wade closed by noting that the FY 2024 Risk Assessment is underway, and she expects the agency to complete the process by the June 2024 deadline. The Chair congratulated Ms. Wade for the removal of PBGC from GAO’s High-Risk List and asked how often risks are assessed during the fiscal year. Ms. Wade meets regularly with the risk owners throughout the year to review mitigation strategies and continuously monitors progress on the top risks. In response to the Chair’s question about efforts to mitigate recruitment and retention risks, Ms. Wade described PBGC’s success in recruiting and retaining talented professionals. The Chair asked about funding requests to improve IT programs and Ms. Wade confirmed that funds were requested to ensure that IT programs are modernized and stable.
Secretary Yellen thanked Ms. Wade and Under Secretary Kolko asked how PBGC’s retention risks for FY 2023 compared to assessment of that risk in prior years. Ms. Wade confirmed that while the retention risk has not worsened, the RMC has monitored it over the past several years, noting the benefits to recruiting of the PBGC’s ranking as one of the top small agencies.
The Chair recognized Constance Donovan, who summarized her 2023 annual report and introduced Senior Associate Camille Castro and Associate Emily Spreiser. Ms. Donovan announced her intention to retire in 2024 and her plans for retirement.
Ms. Donovan noted the unique role of the PBGC Advocate and highlighted a plan sponsor issue that arose in 2015 about whether the PBGC Advocate can join PBGC for a meeting with a plan sponsor. This question was resolved in a 2015 memo from Congress clarifying that the PBGC Advocate should be given access to PBGC documents and meetings with participants or plan sponsors.
Before issuing her 10th report, Ms. Donovan and her staff met with plan sponsor and participant advisors, most of whom expressed concerns about the decline in the number of defined benefit plans. To better understand this, the Office of the PBGC Participant and Plan Sponsor Advocate will host a series of roundtables about how to promote defined benefit plans and related issues affecting the PBGC.
Ms. Donovan discussed PBGC’s work with pension plan participants. Participants with complex benefit determinations experience delays in receiving decisions from PBGC. Ms. Donovan is requesting alternative dispute resolution and improvements in the PBGC benefit determination and benefit appeals processes.
Ms. Donovan next described issues concerning financially distressed small to medium-sized pension plan sponsors, and the need to resolve excise tax liabilities these sponsors owe the Internal Revenue Service. She has encouraged PBGC to devote more resources to more timely address plan sponsor concerns, including by meeting with their representatives regularly to resolve liabilities.
The Chair thanked Ms. Donovan, on behalf of the Board, for her years of service and congratulated her on her upcoming retirement and next steps. In reviewing Ms. Donovan’s 2023 report, the Chair recognized the need for change, noting that Department of Labor Assistant Secretary and PBGC Board Representative Lisa M. Gomez will schedule a meeting to ensure that the issues Ms. Donovan raised receive adequate attention. Secretary Yellen expressed her appreciation for Ms. Donovan’s service, wished her well and thanked her for briefing the Board on a wide variety of important issues meriting follow-up, particularly on issues of private pensions and pricing of insurance. Under Secretary Kolko thanked Ms. Donovan for her thoughtful report and congratulated her on her years of service.
The Chair recognized PBGC Inspector General (IG) Nick Novak, who congratulated Ms. Donovan on her retirement and introduced Deputy Inspector General Brooke Holmes. The IG described his office’s November 2023 management alert regarding the Central States pension fund’s SFA application. The alert identified what the IG had determined to be a weakness in PBGC’s SFA review procedures that resulted in the inclusion of deceased participants in the data used for Central States’ SFA application. The IG recommended PBGC modify its SFA application review procedures to ensure deceased persons from all participant categories are excluded from SFA calculations. In response, PBGC began conducting a death match on the participant census data for all SFA applications using the death master file that PBGC has access to (but plans do not) and requiring SFA applicant plans to adjust their SFA applications for identified deceased participants when calculating the amount of SFA requested. The IG acknowledged that PBGC went above and beyond his recommendations by applying death match audit procedures to the SFA applicant plans under review when the IG issued its report. The IG commended PBGC for taking this extra initiative.
The IG next reported on his office’s audit of PBGC’s Fiscal Year 2023 Financial Statements which was issued on November 15, 2023, resulting in PBGC’s 31st consecutive unmodified financial statement audit opinion. The IG closed his remarks by describing his December 6, 2023 announced engagement to evaluate PBGC’s compliance with the Payment Integrity Information Act of 2019 for the Fiscal Year 2023 and related OMB guidance.
The Chair asked the IG to quantify the number of audit recommendations remaining open and the age of the oldest recommendations. The IG reported that as of January 9, 2024, his office had 17 open recommendations, none of which have been pending for more than 5 years, recognizing the PBGC’s substantial progress closing recommendations over the past several years. Some recommendations remain open because PBGC is seeking budgetary assistance and undergoing systems development to meet the recommendation closure requirements. The Chair thanked the IG for acknowledging PBGC’s work to address the issues the IG identified.
Secretary Yellen and Under Secretary Kolko thanked the IG for his work.
As there were no further questions, the Chair and the Board Members thanked Director Hartogensis and all who participated and adjourned the meeting.
AGENDA
MEETING OF THE BOARD REPRESENTATIVES
OF THE PENSION BENEFIT GUARANTY CORPORATION (PBGC)
Monday, January 29, 2024
11:00 a.m. - 12:00 p.m.
- Introduction by Acting Secretary Su and Approval of the September 28 Board meeting minutes
- Director’s Report
- Risk Management Briefing
- Presentation by the Participant and Plan Sponsor Advocate
- OIG Update