As part of its May  2008 bylaw revision, the board of directors more clearly defined the roles  and responsibilities of its members, representatives, and director. In addition, the new bylaws explicitly define the role and responsibilities  of the director and the corporation’s senior officer positions. Our July 2007 report also asked Congress to consider restructuring the  board of directors to appoint additional members of diverse backgrounds  who possess knowledge and expertise useful to PBGC’s responsibilities  and can provide the attention needed for strong corporate oversight. In  response to these findings, PBGC contracted with a consulting firm to  review governance models and provide a background report to assist the  board in its review of alternative corporate governance structures. Board’s Limited Ability to Provide Policy Direction and Oversight Persists

Our July 2007 report found that 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. Further, we reported that the board relies on PBGC’s executive  committees and working groups for monitoring and reviewing PBGC’s  operations. PBGC may also be exposed to challenges as the board, its representatives,  and director will likely change with the upcoming presidential transition in  January 2009, thus limiting institutional knowledge of the challenges  facing the corporation. PBGC management has experienced partial  leadership transitions in recent years, and in anticipation of the  forthcoming complete leadership change, PBGC is developing additional  materials to include in its official transition package for newly appointed  officials. This additional information could help  the new board members and their representatives better understand the  vulnerabilities and challenges facing the corporation. Congress Has Overseen PBGC in Several Ways, but Some Other Government Corporations Have Additional Reporting Requirements

Congressional oversight of PBGC in recent years has ranged from formal  congressional hearings to the use of its support agencies, such as GAO, the  Congressional Budget Office (CBO), and the Congressional Research  Service (CRS). However, unlike some other government corporations,  PBGC does not have certain reporting requirements for providing  additional information to Congress. Congress Has Overseen PBGC in a Variety of Ways

Since 2002, PBGC officials have testified 19 times before various  congressional committees—mostly on broad issues related to the status of  the private sector defined benefit pension policy and its effect on PBGC  (see table 1). The Millennium Challenge  Corporation is required to formally notify the appropriate congressional  committees 15 days prior to the allocation or transfer of funds related to  the corporation’s activities. Unlike  PBGC’s advisory committee, the advisory boards or committees of other  government corporations—such as the Export-Import Bank and FDIC— are subject to the Federal Advisory Committee Act and some submit  formal reports to their board chair and directors (see table 2). In addition to government corporations, some government  agencies with retirement-related responsibilities—such as the Social  Security Administration (SSA), the Railroad Retirement Board, and the  Federal Retirement Thrift Investment Board—have advisory committees  as part of their governance structures, which annually report to their  respective overseeing bodies. Despite  PBGC’s efforts to improve its bylaws, the three-member board of directors  is still one of the smallest and least diverse of any government  corporation. Other government corporations’ governance structures  include oversight mechanisms, such as standing committees, and  additional reporting requirements to conduct certain oversight functions  and assist their boards of directors. Recommendation for Executive Action

To ensure that recently identified management and financial challenges  facing PBGC are shared with those newly appointed, we recommend that  PBGC provide Office of Inspector General and GAO reports on the  corporation’s financial and management challenges to the newly  appointed board members, board representatives, and director so that  they can take appropriate action as needed. Testimony on Multiemployer Pension Plans. The Pension Benefit Guaranty Corporation and the  Federal Budget.
Why GAO Did This Study

The Pension Benefit Guaranty Corporation (PBGC) insures the pension benefits of 44 million private sector workers and retirees in over 30,000 employer-sponsored pension plans. In July 2007, GAO reported that PBGC's governance structure needed improvements, and asked Congress to consider expanding the board of directors to include additional members. GAO also recommended that the board develop policies and mechanisms consistent with corporate governance practices, and develop formal guidelines to clarify the roles and responsibilities of the board chair, members, their representatives, and the director. On the basis of that work, this report addresses (1) the steps PBGC has taken to improve policy direction and oversight and (2) how Congress applies oversight to PBGC and what other oversight mechanisms exist for government corporations. GAO reviewed PBGC's new corporate bylaws and the structure and reporting requirements of selected government corporations. GAO also interviewed PBGC and Department of Labor officials.

What GAO Found

Although PBGC's board has strengthened the corporation's governing bylaws, the three-member board of directors is still limited in its ability to provide policy direction and oversight to PBGC. In implementing our earlier recommendation, the board revised the corporation's bylaws to more clearly define the roles and responsibilities of PBGC's board members, representatives, director, and senior management. PBGC also contracted with a consulting firm to provide a background report to assist the board in its review of alternative corporate governance structures, including restructuring the board of directors as GAO suggested in 2007. However, because of its small size, the board has not been able to develop procedures and mechanisms to monitor PBGC's operations, such as standing committees, which are mechanisms used by other government corporations. PBGC may also be exposed to challenges as the board, its representatives, and the director will likely change with the upcoming presidential transition in January 2009. While PBGC management has experienced a partial leadership change in recent years and provides operational and financial information to those newly appointed, PBGC Inspector General and GAO reports have recently identified additional financial and operational challenges facing the corporation. This additional information could help the new board members better understand the vulnerabilities and challenges facing the corporation. PBGC is subject to routine congressional oversight, but certain other government corporations have other types of reporting requirements in place--such as congressional notifications and reporting protocols for their advisory committees--to ensure effective communication exist between the corporations and Congress. Congressional oversight of PBGC in recent years has ranged from formal committee hearings to investigations and studies conducted by its congressional support agencies. For example, since 2002, PBGC officials have testified 19 times before several different committees on issues such as the status of its financial condition. Further, GAO, the Congressional Budget Office, and the Congressional Research Service have issued a variety of reports and testimonies on PBGC financial and operational matters. However, PBGC does not have reporting requirements applied to other government corporations for providing additional information to Congress. For example, the Millennium Challenge Corporation and the Commodity Credit Corporation are required to notify Congress prior to conducting certain financial transactions. The advisory committee of the Federal Deposit Insurance Corporation formally reports to its board of directors, while the Export-Import Bank of the United States' advisory committee formally reports to its board and Congress each year on matters related to their respective organizations. In addition, the advisory boards of other government entities with retirement-related responsibilities--such as the Social Security Administration, the Railroad Retirement Board, and the Federal Retirement Thrift Investment Board--provide reports to their overseeing bodies.