The day after the Senate confirmed him to be the new director of the Pension Benefit Guaranty Corp. in April 2019, Gordon Hartogensis had one task: Erase a deficit of $63.7 billion or risk insolvency.
Then the coronavirus pandemic arrived.
What could have been disastrous for the PBGC, a small federal agency established in 1974 to protect the retirement savings of private-sector employees, eventually became fortuitous. “You can think of PBGC as inversely correlated to the economy,” said Hartogensis. “When the economy’s doing badly and the challenge is up there, we get a lot of business.”
With a background in private equity and experience having managed two companies, Hartogensis at first thought he would be working with Congress to find a solution. “Let me be as clear as I can,” he said during his testimony before the Senate Finance Committee in December 2019, “unless Congress acts, participants in insolvent plans will receive next to nothing.”
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The trouble beganduring the 2007-08 financial crisis, when multiemployer plans — those created by an agreement between two or more employers and a union — saw their investments in Treasuries lose value. Then the PBGC deficit grew larger, from $8.3 billion in fiscal year 2013 to $42.4 billion in fiscal year 2014, according to the Congressional Research Service.The plans soon had a negative cash flow, and it became difficult to bring in new employers because few wanted to join an underfunded pension plan. Hartogensis likened the plan to a boat with a hole in the bottom.