PBGC to diversify in effort to cover liabilities

The Pension Benefit Guaranty Corporation, the USgovernment-sponsored guarantor for pensions, plans to step up itsinvestments in riskier assets such as equities as it seeks to plug a$14bn deficit.  The move, quietly announced on the President’s Daypublic holiday in the US on Monday, will mean the PBGC will double itsallocation of equity investments to 45 per cent of its total assets.  ThePBGC, which in effect acts as a pensions insurance fund, guarantees thebenefits of 44m workers and is currently paying benefits to 700,000retirees. It holds approximately $55bn (€37.4bn, £28bn) in assets toinvest under its new policy.  It has, however, no access to credit from the government. Itrelies only on insurance premiums paid by the companies whose plans itinsures and the investment returns those premiums can earn. If itbecame insolvent, it would either have to slash benefits paid toretirees or seek a taxpayer bailout.  The PBGC did not have theresources to meet all its future commitments, Charles Millard, directorof the corporation, said yesterday.

Source/more:  Financial Times, http://www.ft.com/cms/s/0/51023502-de5e-11dc-9de3-0000779fd2ac.html?nclick_check=1