2). Board Structure Provides Limited Attention and Mechanisms for Overseeing PBGC

PBGC’s board has limited time and resources to provide policy direction  and oversight and has not established procedures and mechanisms to  monitor PBGC operations. Although PBGC’s board members have met  more frequently since 2003, the three cabinet secretaries composing the  board have numerous other responsibilities, and have been unable to  dedicate consistent and comprehensive attention to PBGC. In fact, we  found that between 1980 and May 2007, a span of 27 years, there were only  18 board meetings, 10 of which were since 2003. Further, the  board has not established important mechanisms, such as the use of  standing committees, to monitor and review PBGC operations and  programs. Instead, the board mostly relies on the Inspector General and  PBGC’s management oversight committees to ensure that PBGC is  operating effectively. However, there are no formal protocols requiring the  Inspector General to routinely meet with the board or its representatives  and staff, and PBGC’s management committees are neither independent of  PBGC, nor are they required to routinely report all matters to the board. As a result, the effectiveness of the board’s oversight may be limited,  because it cannot be certain that it is receiving high-quality and timely  information about all significant matters facing the corporation, even  though PBGC officials report that they informally communicate with the  board representatives weekly. While officials believe that  this process has generally worked well, in some cases board members  have not received information in a timely manner. Lack of Protocols for Administering PBGC Can Result in Confusion and Inefficiencies

While ERISA provides the board, the Secretary of Labor as Chair, and  PBGC’s Director the authority to oversee and administer PBGC, no formal  guidelines articulate the different roles and responsibilities of the board  and PBGC management. As  a result, DOL and PBGC disagree over the extent to which PBGC is a  separate and distinct executive agency. The uncertainty of PBGC’s status has resulted in confusion over the extent  to which DOL has the authority to manage PBGC’s operations. However,  neither the board, DOL, nor PBGC has developed formal policies and  procedures to define its authorities and responsibilities. Instead, PBGC  officials typically react to DOL’s periodic written and oral  communications, which PBGC officials said sometimes become a part of  PBGC’s operational framework. For example:    During the fiscal year 2007 budget process, DOL and PBGC officials  disagreed over the amount of money included in PBGC’s budget for the  development of a new system for pension plan sponsors to file their  required annual reports to DOL electronically. Recommendations for Executive Action

To improve overall accountability and oversight of PBGC, we recommend  that the Secretaries of the Treasury, Labor, and Commerce, as PBGC’s  board of directors,    establish policies, procedures, and mechanisms for providing oversight  of PBGC that are consistent with corporate governance guidelines and    establish formal guidelines that articulate the authorities of the Board  Chair and the Department of Labor, the other board members and their  respective departments, and PBGC’s Director. To identify the extent to which PBGC’s governance structure provides  policy direction and oversight, we reviewed previous GAO work on the  governance of private sector and government corporations and PBGC’s  single-employer and multiemployer insurance programs and management  challenges. Pension Benefit Guaranty Corporation: Statutory Limitation on  Administrative Expenses Does Not Provide Meaningful Control.
Why GAO Did This Study

The Pension Benefit Guaranty Corporation (PBGC) insures the pensions of millions of private sector workers and retirees in certain employer-sponsored pension plans. It is governed by a board of directors consisting of the Secretaries of the Treasury, Labor, and Commerce, who are charged with providing PBGC with policy direction and oversight. This report assesses (1) the extent to which PBGC's governance structure provides PBGC with policy direction and oversight, and (2) whether administrative responsibilities among the PBGC board, Department of Labor (DOL), and PBGC management are clearly defined. We examined corporate governance practices, select federal government corporations, and reviewed documents on PBGC's structure. We interviewed officials from all board member agencies and PBGC, among others.

What GAO Found

Although PBGC's board has provided greater attention to PBGC since 2003, the board has limited time and resources to provide policy direction and oversight and has not established comprehensive written procedures and mechanisms to monitor PBGC operations. Because PBGC's board is composed of three cabinet secretaries, who have numerous other responsibilities, the board structure does not guarantee that PBGC's board is active and diverse. For example, since 1980, a span of 27 years, there were only 18 official board meetings. Further, the board has not established formal procedures to ensure that PBGC management provides it information on all policy matters nor has it developed standing committees to oversee operations. Instead, the board relies on PBGC's Inspector General and management's oversight committees to ensure that PBGC is operating effectively. However, there are no formal protocols concerning the Inspector General's interaction with the board, and PBGC internal management are not independent and are not required to routinely report all matters to the board. Even though PBGC uses informal channels of communication to inform its board members, the board's oversight may be limited, because it cannot be certain that it is receiving high quality and timely information about all significant matters facing the corporation. PBGC's lack of formal guidelines to articulate the administrative roles and responsibilities among the board, the Secretary of Labor as the board chair, board members' agencies, and the PBGC Director has led, at times, to confusion and inefficiencies. The board has not addressed uncertainty over the extent to which PBGC is a separate and distinct executive agency, a fact that has resulted in confusion over when DOL has the authority to manage PBGC's operations. Further, neither DOL nor PBGC has developed formal policies and procedures to define the board's authorities and responsibilities. Instead, PBGC officials typically react to DOL's periodic written and oral communications, which PBGC officials said sometimes become a part of PBGC's operational framework. For example, PBGC is required to incorporate its budget request with DOL's budget request, and over the years, DOL has taken a more active role in reviewing PBGC's budget. However, PBGC officials believe that DOL has in some cases overstepped its role. For instance, DOL and PBGC officials disagreed over the inclusion of a funding request in PBGC's fiscal year 2007 budget.