Pension Benefit Guaranty Corp. Optimas Award Winner for Managing Change

By Mark Jr.

Mar. 20, 2006

Unfortunately for the Pension Benefit Guaranty Corp. and its customers, business has been brisk–almost overwhelming–for several years, forcing the agency to fortify its workforce to maintain a high level of service.

   The PBGC insures the defined-benefit pensions of 44 million workers and retirees in 31,000 plans. High-profile bankruptcies, especially in the airline and steel sectors, often include pension terminations in which companies fob off their obligations to the PBGC. The value of claims it handles has soared from $2.8 billion in 2000 to $9 billion in 2004.

   By any measure, there’s been a dramatic quickening of the 845-employee agency’s tempo. It has 390 active bankruptcies on its books–an increase of 46 in 2005–and a $22.8 billion deficit. Assets under its management have jumped from $39 billion to $58 billion during the past year. And 25 percent more people than last year–about 683,000–are receiving its benefits. Adding to the stress is the fact that market conditions and court rulings determine the pace and scope of the PBGC’s activity.

   “Most other government agencies control the agenda through the regulatory process or the enforcement process,” says Bradley Belt, the agency’s executive director.

   In order to cope with escalating corporate bankruptcies and related defined-benefit pension defaults, the PBGC retained seasoned veterans to preserve institutional knowledge while recruiting new talent to bring in fresh perspectives. It implemented programs to open lines of communication, increase engagement and satisfaction and improve training.

   The results have been encouraging. The agency’s retention rate in critical jobs is up by 25 percent. Turnover in key positions has dropped by 20 percent, while absenteeism has declined by 18 percent. In recruiting, the PBGC boasts an 85 percent success rate in hiring targeted skilled candidates. It also was the first agency to be fully certified by the Office of Personnel Management and the Office of Management and Budget for its executive evaluation system.

   “We are very focused on enabling the corporation to effectively meet extraordinary operational, financial and policy challenges, driven primarily by external factors,” Belt says. “That means ensuring we have the right people, processes and systems in place. Maximizing the value of our most important asset–our people–is a key goal.”

   The PBGC sharpens its edge by concentrating on customer satisfaction. Unlike a car insurance consumer who can choose from among Geico, State Farm and Allstate, a person who loses his or her defined-benefit pension automatically becomes a PBGC client.

   “Although we have captive customers, they should expect the same level of customer service that a private-sector insurer who has to compete for customers would provide,” Belt says.

   Thanks to workplace improvements, a rejuvenated PBGC staff is better able to meet the demands of clients who are going through traumatic life changes.

   One way the agency accomplishes this mission is by providing Web-based services that let customers manage every dimension of their accounts in one place. The PBGC also can perform rapid-response functions. After Hurricane Katrina, the agency identified all of its customers in the affected area and followed up with personal phone calls. Another form of outreach comes in town-hall-style meetings the agency conducts throughout the country with its benefit recipients.

   Although spectacular defaults and pension reform legislation tend to make the news, the agency focuses on the human dimension of pension failure.

   “This has a very real impact on individuals’ financial security,” Belt says.

   For responding to escalating pension defaults and a huge increase in its customer base by improving its workforce, the PBGC is the winner of the 2006 Optimas Award for Managing Change.

HEADQUARTED IN WASHINGTON, D.C., the PBGC is a 845-employee federal agency governed by a board consisting of the secretaries of Labor, Commerce and the Treasury. The PBGC does not use taxpayer money to fund the benefits it provides; it collects premiums from companies and generates revenue from assets it manages.
THE PBGC PROTECTS THE BENEFITS of 44 million American workers and retirees in more than 31,000 ongoing pension plans. The agency is directly responsible for the pensions of 1.3 million people who earned benefits in failed pension plans. The maximum annual PBGC payment to an individual is $45,613.

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