News & Updates

Major Tenant in Republic's Portals Tries to Preserve Pensions for Millions

March 29, 2023
By Omari Daniels | Washington Post
Yvette Julian climbs the grand staircase in the agency’s new office.
(Matt Roth for The Washington Post)

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.”

The trouble began during 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.

The American Rescue Plan (ARP) of 2021 was a savior. The PBGC created a Special Financial Assistance Program using money from the ARP to provide funding for 200 troubled multiemployer plans and started investing.

At the end of 2022, the Ironworkers Local 751 in Anchorage received $53.5 million in financial assistance that allowed all 215 workers to receive their full pensions back.

“Right now, they’re just in a state of shock because they never believed this would happen,” said Anthony Ladd, the Alaska Ironworkers Pension Trust’s business manager and financial secretary/treasurer. “It’s a relief that what they were promised would be returned to them.”

The application process took three months after Ladd filed a request through PBGC’s online portal. The union’s attorneys and PBGC actuaries negotiated the final price based on calculations of company assets over time.

Gordon Hartogensis, director of the Pension Benefit Guaranty Corp., leads a March 14 meeting at the agency's new office near the Wharf in Washington D.C. (Matt Roth For The Washington Post)

Members of the Roofers Local 134 in Toledo are also ecstatic. Michael Kujawa, chairman of the Roofers Local 134 Pension Plan, cut pension benefits for 45 months during the pandemic. After a review, the PBGC approved backpay and restored pension payments to their pre-pandemic levels.

While multiemployer plans are an important part of PBGC’s portfolio, benefiting 11.2 million workers and retirees, the bulk of the agency’s business involves single-employer pensions or 22.3 million workers and retirees in 23,800 plans. Some of these are defined-benefit pension plans, which only 3 percent of employees in the private sector rely on, according to a report published in January by the U.S. Bureau of Labor Statistics. About 54 percent of private-sector workers have access only to defined contribution plans that include a 401(k) plan or a 403b plan plus a company match. Twelve percent have access to both types of plans.

Morale is high these days at PBGC. Besides saving numerous people from bankruptcy in retirement, the company is moving from its old space near the White House to modern offices overlooking the Potomac River in an area bursting with new restaurants, hotels and residential apartments. It placed second in the category of small agencies under 1,000 employees in the annual survey conducted by the Office of Personnel Management. Before the pandemic, in 2018, it placed fifth. Three groups within the PBGC also received special recognition.

Alice Maroni, PBGC’s chief management officer, joined the agency in 2011. Eyeing the new seating areas near the windows that are there to encourage collaboration, she said, “We want to draw people in and make them feel like they’re a part of what’s going on and to believe that the leadership cares about them.”

Janice Brown-Taylor, PBGC’s deputy chief of benefits administration, has been with PBGC for over 20 years and has developed the mantra “One team, one goal, one mission.” Brown-Taylor said she considers her proudest moment to be the meeting she had with the employees of LTV Steel, a client for whom she calculated benefits to ensure their pensions remained intact.

“These people had worked there for 30 years and they felt hopeless,” Brown-Taylor said. “When we went to their town and talked about PBGC’s role and provided them assurance, those are the moments that I reflect on for what we do.”

PBGC is solvent now and set to remain so for an estimated 40 years or more.

“The last four years, we’ve been through a war together between covid and the multiemployer crisis,” Hartogensis said. “We’ve climbed a mountain and it almost feels like a 1,000-person start-up company.”

In 2024, Hartogensis finishes his five-year term. The decision whether to extend that tenure or renominate him is left to the Biden administration, subject to Senate approval, according to a PBGC spokesperson.