Two key Senate committee chairmen are backing proposals to increase the number of board members overseeing the Pension Benefit Guaranty Corp., boosting prospects for approval of legislation on the subject.
The endorsements — from Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, and Max Baucus, D-Mont., chairman of the Senate Finance Committee — were included in a brief statement published in the March 8 edition of the Congressional Record.
In the statement, both lawmakers indicated support for proposals to enhance the PBGC's governance included in legislation introduced by Herb Kohl, D-Wis., chairman of the Senate Special Committee on Aging, on July 30. The bill is pending before the Senate HELP Committee.
The endorsements are important because only the Senate HELP and Finance committees have direct oversight responsibility for legislation affecting the PBGC; the Senate Aging Committee does not.
The PBGC board currently has three members — the secretaries of Labor, Treasury and Commerce.
The board has only met 20 times in the past 28 years, Mr. Kohl said a joint Congressional Record statement with Messrs. Harkin and Baucus. His legislation would expand the board to seven members, require it to meet at least four times a year, and give the PBGC's advisory committee, inspector general and general counsel direct access to the board.
In addition, the legislation would bar the PBGC's director from any involvement in hiring money managers or from “participating in any matter that may have or appear to have a conflict of interest,” according to the text of the bill.
The legislation was spurred in part by allegations that Charles E.F. Millard, the PBGC's former director, may have been inappropriately involved in the hiring of money managers at the agency. These are allegations that Mr. Millard, through his attorney, has denied. He has never been charged with any wrongdoing.
“I plan to hold hearings in the HELP Committee this year addressing the state of the defined benefit system and the PBGC,” Mr. Harkin said in the joint statement. “I look forward to discussing with Sen. Kohl the ideals and goals reflected in the Pension Benefit Guaranty Corporation Governance Improvement Act of 2009, and I thank him for bringing this important legislation to my attention.”
“I applaud the chairman (Mr. Kohl) ... for raising this important issue,” Mr. Baucus added in the statement. “I look forward to working with him and the chairman of the Health, Education, Labor and Pensions Committee on addressing the shortcomings he has highlighted.”
Mr. Kohl, in a March 29 e-mail to Pensions & Investments, said: “Strengthening the security of pension plans that cover nearly 44 million Americans is an urgent priority. I look forward to working with Chairmen Harkin and Baucus on addressing this important issue.”
Said Mr. Kohl in the joint statement: “The role of PBGC is too crucial to allow its governance to slip through the cracks. And we have seen devastating results when it has. The former PBGC director (Mr. Millard) was able to adopt a risky investment strategy just months before the market downturn and inappropriately involve himself in the bidding process, with little more than a rubber-stamped approval from the board.”
Jeffrey Speicher, a PBGC spokesman, declined comment.