Home Personal Finance A small federal agency not only solved its own deficit problem but saved the pensions of thousands of workers during the pandemic

A small federal agency not only solved its own deficit problem but saved the pensions of thousands of workers during the pandemic

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Pension Benefit Guaranty Corp. renegotiated retirement plans during pandemic

Gordon Hartogensis, director of Pension Benefit Guaranty Corp., leads a meeting on March 14 at the agency’s new offices near the docks in Washington, DC (Matt Roth For The Washington Post).


A day after the Senate approved his appointment as a new director of Pension Benefit Guaranty Corp. in April 2019, Gordon Hartogensis had one task.

Then came the novel coronavirus pandemic.

What could have ended up being disastrous for the PBGC, a small federal agency founded in 1974 to protect the retirement savings of public and private sector employees, ultimately happened to be. “PBGC can be thought of as being inversely correlated with the economy,” Hartogensis said. “We get a lot of business when the economy isn’t doing well and the challenges are there.”

Hartogensis, who comes from a private equity background and has experience managing two companies, initially thought he would work with Congress to find a solution. “Let’s be as clear as we can,” he said in testimony before the Senate Finance Committee in December 2019, adding, “Unless Congress takes action, the participants in the failed plan will receive almost nothing. No,” he said.

trouble started During the 2007-2008 financial crisis, when multi-employer schemes (created by agreements between multiple employers and unions) lost their investment value in the public treasury. Since then, PBGC’s deficit has grown from $8.3 billion in fiscal 2013 to $42.4 billion in fiscal 2014, according to the Congressional Research Service. The scheme quickly became cash flow negative, making it difficult to hire new employers as few people wanted to join the underfunded pension scheme. Hartogensis likened the plan to a boat with a hole in the bottom.

The 2021 American Relief Program (ARP) was a savior.of PBGC used funds from ARP to create a special financial assistance program to fund and invest in 200 troubled multi-employer programs.

By the end of 2022, Anchorage’s Ironworkers Local 751 will receive $53.5 million in financial assistance, allowing all 215 workers to return their pensions in full.

“They’re in shock right now because they didn’t expect this to happen,” said Anthony Rudd, business director, financial secretary and treasurer of Alaska Ironworkers Pension Trust. rice field. “It’s a relief that what they promised has been returned to them.”

After Ladd applied through the PBGC’s online portal, the application process took three months. Union attorneys and his PBGC actuary negotiated a final price based on calculations of company assets over time.

Members of Roofers Local 134 in Toledo are also delighted. Michael Kujawa, chairman of the Roofers Local 134 Pension Plan, cut his pension benefits for 45 months during the pandemic. After review, the PBGC approved deferred payments and returned pension payments to pre-pandemic levels.

Multi-employer plans are a significant part of PBGC’s portfolio, benefiting 11.2 million workers and retirees, but the majority of the agency’s business is either single-employer pensions or 23,800 plans. is concerned with 22.3 million workers and retirees. Some of these are defined benefit pension plans, on which only 3% of private sector employees rely, according to his January report by the U.S. Bureau of Labor Statistics. About 54% of private sector workers have access only to defined contribution plans, including 401(k) or 403b plans and Corporate Match. 12% have access to both types of plans.

PBGC morale is high these days. In addition to saving many people from retirement bankruptcy, the company is moving from an older space near the White House to modern offices overlooking the Anacostia River in an area lined with new restaurants, hotels and residential apartments. In an annual survey conducted by the National Personnel Authority, it ranked second in the category of small agencies with less than 1,000 employees. Before the pandemic he was fifth in 2018. His three groups within PBGC also received special recognition.

Alice Maroni, CEO of PBGC, joined the agency in 2011. Noting the new seating area near the windows that are there to foster collaboration, she said: It’s about believing that what’s going on and that leadership cares about them. ”

Janice Brown-Taylor, PBGC’s Deputy Head of Benefits Administration, has worked at PBGC for more than 20 years and developed the motto: “One Team, One Goal, One Mission.” Brown-Taylor said she considers it her proudest moment to meet an LTV Steel employee.

“These people had worked there for 30 years and felt hopeless,” Brown-Taylor said. “When we go to their town and talk about the PBGC’s role and give them a guarantee, that’s the moment I look back at what we’re doing.”

PBGC is currently a solvent and will remain a solvent for an estimated 40 years or more.

“For the past four years, we have been going through the war between covid and the multi-employer crisis together,” Hartogensis said. “We climbed mountains, but he’s like a 1,000-person startup.”

In 2024, Hartogensis will complete a five-year term. A PBGC spokesperson said the decision to extend his term or re-appoint him rests with the Biden administration, subject to Senate approval.

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