The PBGC on Friday announced a new investment policy for its $80 billion in assets that targets 70% in fixed income and 30% in equities and other non-fixed-income investments, including alternatives.
The board of the Pension Benefit Guaranty Corp. — Labor Secretary Hilda L. Solis, Treasury Secretary Timothy Geithner and Commerce Secretary Gary Locke — approved the new policy, according to a news release from the federal pension insurer.
The new policy replaces an interim policy instituted in May 2009, when the current board suspended the policy approved by the board in 2008 during the Bush administration after the PBGC Inspector General Rebecca Batts raised “significant concerns around the circumstances” of its implementation, a DOL spokesman said. The interim policy was 26.5% in public equities and 73.5% in fixed income; the equity allocation was replaced in April 2011 with a range of 25% to 30% in anticipation of the new policy announced Friday.
PBGC spokesman Marc Hopkins referred all inquiries to the Department of Labor.
According to the PBGC’s latest annual report for the year ended Sept. 30, its single-employer pension plan program had a $21.6 billion deficit, up 2.5% from a year earlier. The multiemployer plan program had a deficit of $1.4 billion, 61% above the previous year.
The agency’s portfolio returned 12.1% on its investments for the latest full fiscal year.
The single-employer plan program had assets of $77.8 billion and liabilities of $99.4 billion as of Sept. 30, compared with assets of $67.6 billion and $88.7 billion in liabilities a year earlier. The multiemployer plan program had assets of $1.6 billion and liabilities of $3 billion as of Sept. 30, compared with $1.45 billion in assets and $2.33 billion in liabilities 12 months prior.
