WASHINGTON — The Pension Benefit Guaranty Corp. hired John H. Greenberg as the first chief investment officer in the agency's 34-year history.
His mission: implement the agency's controversial new asset allocation plan.
Mr. Greenberg, who was managing director of public markets for the $36.7 billion State Retirement and Pension System of Maryland, Baltimore, starts his new job Sept. 15.
“I want to get up and running as quickly as possible,” Mr. Greenberg said in an interview.
Mr. Greenberg got the PBGC's nod for the new slot — which pays $165,000 a year — because the agency has recently launched a major new investment strategy and needed someone with Mr. Greenberg's wide-ranging investment experience to oversee the effort, Charles E.F. Millard, PBGC director, said in an interview.
“With a more complex and diverse investment policy, we felt we needed additional resources and additional expertise at a senior level,” Mr. Millard said.
The new asset allocation is designed to help close the PBGC's $14 billion deficit over the next 10 to 20 years. Under the new policy, 45% of assets will be in equities, 45% in fixed income and 10% in alternatives.
Previously, 75% to 85% of assets were in a liability-driven investment strategy. The remainder of the portfolio was invested in stocks.
The shift in investment policy has raised some concern that a downturn in the equity market could undermine the PBGC's ability to act as an insurer because both the agency and the plans it insures will suffer losses in their equity portfolios at the same time.
“It's poor risk management,” Mark Ruloff, director, asset allocation, at Watson Wyatt Worldwide, Arlington, Va., said when Mr. Millard originally announced the investment switch early this year (Pensions & Investments, Feb. 18).
But Mr. Greenberg said the new investment policy improves the chances that PBGC will have the assets to meet its obligations going forward.
“The biggest risk is not having money available to pay the people who rely on the PBGC for their retirement payments,” Mr. Greenberg said. “The new policy enhances the chance to have the money to pay the benefits. If you look very long term, the data show that equities tend to outperform bonds.”
Mr. Greenberg, 50, said he joined the Maryland system in 1995 as a credit analyst for an internal bond portfolio, taking on seven different job titles over the ensuing years.
As Maryland's managing director of public markets, he oversaw all exchange-traded investments — everything but private equity and private real estate, he said.