New PBGC Director Approved

With only a routine approval vote from the full Senate to step over Mitch McConnell’s brother-in-law is set to head the Pension Benefit Guaranty Corporation (PBGC) as announced last Thursday:

• Gordon Hartogensis [Heart-oh-gensis], to serve as Director of the Pension Benefit Guaranty Corporation.

• The Finance Committee has already approved Mr. Hartogensis 25-2, including the support from Ranking Member Wyden. He has extensive experience in financial planning, and his successful entrepreneurial experiences have equipped him to lead PBGC well.

Gordon Hartogensis will need more than “successful entrepreneurial experiences” to lead the PBGC through these minefields:

PBGC Plans, a Book, & a Clip

Slow time of year at work so here is some stuff I have been doing.

Struggling multiemployer plans see help ahead at expense of healthy funds

That is the headline the people at Pensions & Investments decided upon after reviewing a draft proposal that came out of the Joint Select Committee on Solvency of Multiemployer Pension Plans (Bailout Committee). There would no federal loan program. Instead there would be:

Local 805 Benefit Cuts Finalized

The Local 805 Pension Plan of New York, NY got government approval to cut benefits last month and, after a voting process that even Floridians would be find barbaric, the PBGC just announced how much.

PBGC & SEPs (3): GE Bailout

Forbes had an article on how the bankruptcy of a sponsor of a large Single Employer Defined Benefit Plan would impact participants and the PBGC.

In its 2018 Annual Report, the PBGC reports that the Single-Employer Plan had assets of $109.9 billion and liabilities of $107.5 billion for a net of 2.4 billion, a big improvement from last year’s -10.9 billion.

At the end of 2017, the portion of GE’s pension plan that is insured by PBGC had assets of $50.4 billion and liabilities of $68.3 billion for a net underfunding of $17.9 billion.

If the PBGC were to take over GE’s pension plan, the financial stability of Single-Employer plan would suffer greatly. The Plan would have assets of about $163 billion and liabilities of about $176 billion for a net underfunding of about $13 billion. That does not mean payments would stop, or even be reduced. But it means that eventually, the plan would run out of money before it could meet its obligations. To make the program financially sound, something has to change.

If the PBGC were to take over the GE Pension Plan it would be the loss of $270 million in premiums that would hurt the most. Let’s look at data from the latest 5500 filing.

PBGC & SEPs (2): In the Black

Last week the Pension Benefit Guaranty Corporation (PBGC) released their 2018 annual report and it turns out that their Single Employer Program has wiped out their deficit and is showing profits. Here is how the PBGC explains it:

PBGC & Single Employer Plans (1): The Plans

This week the Pension Benefit Guaranty Corporation (PBGC) released their 2018 annual report, the Office of Inspector General released their audit report of PBGC’s financial statements and Forbes had an article on how the bankruptcy of a sponsor of a large Single Employer Defined Benefit Plan would impact participants and the PBGC.

With so much to digest a series is warranted so here it is, starting with data taken from the latest 5500 filings of 28 Single Employer Plans with over 100,000 participants sorted by funded status.