PBGC’s Equity Investments Down $3 Billion in Fiscal 2008

The Pension Benefit Guaranty Corp. lost at least $3 billion in equity investments during the first 11 months of its recently concluded 2008 fiscal year, with more losses likely after full-year results are reported, House Education and Labor Committee Chairman George Miller, D-California, said Wednesday, October 22.

According to a PBGC document based on unaudited results obtained by Miller’s committee, the PBGC lost $3.12 billion in equity investments during the past fiscal year through August. That loss was only partially offset by income of $1.9 billion for fixed-income investments. The PBGC’s 2008 fiscal year ended September 30.

The $3.12 billion in losses from equity investments in fiscal 2008 is almost the exact reverse of fiscal 2007, when the PBGC reported $3 billion in income from equity investments and total investment income of $4.76 billion.

A PBGC spokesman said that “investment performance is only part of PBGC’s financial picture.” In fact, he said, the agency’s 2008 deficit is expected to be somewhat lower—due to such factors as higher interest rate assumptions used to calculate liabilities—than the 2007 deficit of $14 billion.

“We expect the new deficit figure will be about $10 billion to $12 billion,” the spokesman said.

He also said the value of the PBGC’s overall portfolio declined about 1.2 percent from January 1 through August 31. By contrast, the S&P 500 index declined 14.3 percent over the same period, he said.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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