Pension Benefit Guaranty Corporation Issues Report: 'FY 2020 Annual Report'

WASHINGTON, Jan. 3 -- Pension Benefit Guaranty Corporation issued the following report, dated December 9, 2020, entitled "Fiscal Year 2020 Annual Report."

Here is the strategic goals and results of the 153-page report:

STRATEGIC GOALS AND RESULTS

PBGC's FY 2020 Annual Performance Report highlights the Corporation's achievements, accomplishments, and performance results through the lens of its strategic goals. The Corporation's priorities are to preserve plans and protect pensioners, pay timely and accurate benefits, and maintain high standards of stewardship and accountability.

GOAL 1: PRESERVING PLANS AND PROTECTING PENSIONS

PBGC engages in activities to preserve plans and protect participants by administering two separate insurance programs. The Multiemployer Program protects about 10.9 million workers and retirees in about 1,400 pension plans. The Single-Employer Program protects about 23.5 million workers and retirees in about 23,200 pension plans.

To help further PBGC's mission, on October 22, 2020, President Donald J. Trump directed by memorandum the Secretary of the Treasury, the Secretary of Commerce, and the Secretary of Labor, who together comprise the PBGC Board of Directors, to review the pension plans held in trusteeship by PBGC and recommend legislation or other actions to address the financial health of PBGC-covered plans and PBGC's insurance programs. The memorandum directs that proposals appropriately balance the interests of relevant stakeholders, notably employers, unions, taxpayers, workers, and retirees. Additionally, the President directed the Board Secretaries to review the termination of the Delphi Salaried Pension Plan and formulate recommendations regarding benefits and transparency, including proposed legislation and any appropriate action that may be taken consistent with applicable law. On this topic, a September 1, 2020, decision by a panel of the United States Court of Appeals for the Sixth Circuit, affirmed a federal district court's grant of summary judgment to the agency on the grounds that the agency's actions were consistent with governing law. A petition for rehearing is currently pending before the Sixth Circuit.

MULTIEMPLOYER PROGRAM

The Multiemployer Program covers defined benefit pension plans that are created through one or more collective bargaining agreements between employers and one or more employee organizations or unions. The employers are usually in the same or related industries, such as transportation, construction, mining, and hospitality. PBGC provides financial assistance to insolvent plans to allow them to pay guaranteed benefits and reasonable administrative expenses.

In FY 2020, PBGC provided $173 million in financial assistance to 95 multiemployer plans, including one facilitated merger. At year end, 91 insolvent plans continued to receive financial assistance covering about 79,600 participants receiving guaranteed benefits. An additional 27,600 participants in the insolvent plans are eligible to receive benefits once they retire.

The Corporation initiated audits of eight terminated or insolvent multiemployer plans covering more than 5,500 participants. The objectives of the audits are to ensure timely and accurate benefit payments to all participants, compliance with laws and regulations, and effective and efficient management of the remaining assets in terminated and insolvent plans.

PBGC regularly provides informal consultations to plan sponsors and practitioners on partition and merger applications, alternative withdrawal liability requests, plan insolvency, and Title IV compliance issues to assist plans in making their formal requests to PBGC more efficient and effective.

Multiemployer Plan Partitions and Applications for Benefit Suspensions

The Multiemployer Pension Reform Act of 2014 (MPRA) offers more options for plans that are likely to become insolvent. Certain critical and declining plans that are projected to run out of money may apply to the Treasury Department for a suspension of benefits. Applications may include benefit suspensions to 110 percent of PBGC's guarantee level, except for age- and disability-protected benefits. Pursuant to the statute and subject to Treasury Department regulations, a plan sponsor's determinations used in formulating a suspension application shall be accepted unless the Treasury Department, in consultation with PBGC and the Department of Labor, conclude that the plan sponsor's determinations were "clearly erroneous."

Critical and declining plans may also request partition assistance from PBGC. A partition allows plans to transfer responsibility for paying monthly guaranteed benefits to a portion of the plan's participants and beneficiaries through a newly created successor plan that receives financial assistance from PBGC.

For a plan to be eligible for a partition, the plan sponsor must show that it has taken all reasonable measures to avoid insolvency. The plan must also demonstrate that assistance is necessary for the plan to avoid running out of money and is expected to help the plan's long-term solvency. Plans applying for a partition are also required to apply to the Treasury Department for a suspension of benefits to the maximum extent allowable. In such a case, a partition may only be approved if the suspension is approved and vice versa. When a partition is approved, the original plan has an ongoing obligation to pay and preserve benefits for all participants at levels above PBGC's guarantee amounts.

In FY 2020, PBGC issued an order partitioning the Bricklayers and Allied Craftsmen Local 7 Pension Fund (Bricklayers 7 Fund) covering about 400 participants. The partition moves a portion of the plan's guaranteed benefit obligations to a new, separate plan. On October 1, 2020, PBGC began providing financial assistance to the Bricklayers 7 Fund to pay benefits for participants in the new plan.

Multiemployer Plan Withdrawal Liability

Withdrawal liability represents the amount of money owed by an employer to an underfunded multiemployer pension plan after withdrawing from the plan as a contributing employer. The amount of withdrawal liability is based on the employer's share of the unfunded vested benefits in that plan, but is capped based generally on an employer's contribution history over the prior ten years and payable annually for no more than twenty years. Withdrawal liability helps prevent withdrawing employers from shifting pension obligations to the remaining employers in a plan and provides some funding protection to the plan.

By law, multiemployer plans may adopt alternative withdrawal liability methods for allocating unfunded vested benefits. In FY 2020, PBGC approved seven alternative methods adopted by plans for a variety of reasons (including one modification of a prior rule), based on PBGC's determination that these methods would not significantly increase the risk of loss to plan participants and beneficiaries or to PBGC. As a means of attracting new employers into underfunded plans, two plans received PBGC's concurrence in creating a new "pool" of liabilities for these new entrants, known as a "two-pool alternative allocation method." The Corporation approved one request to adopt the building and construction industry withdrawal liability exemption having found that adoption of the exemption would not adversely affect the funding of the pension plan. The building and construction industry withdrawal liability rule exempts withdrawing employers from withdrawal liability if certain criteria are met.

PBGC also reviewed one proposed rule for alternative terms and conditions for satisfaction of withdrawal liability.

Multiemployer Plan Mergers and Transfers

MPRA allows critical and declining plans that are likely to become insolvent to request financial assistance from PBGC upon merging with another multiemployer plan. Financial assistance may promote mergers with a more viable plan and eliminate the need for benefit reductions.

In FY 2020, PBGC approved the merger of the Laborers International Union of North America 1000 Pension Fund (Local 1000 Plan) with the Laborers Local 235 Pension Fund (Local 235 Plan, collectively the Plans), PBGC's first facilitated merger under MPRA. PBGC is providing three annual installments of $8.9 million to the merged plan. The Local 1000 Plan, which was in critical and declining status, had been projected to become insolvent in 2026. The merger enabled the Local 1000 Plan to postpone or avoid certain benefit reductions, while not harming the Local 235 Plan. The financial assistance is expected to reduce PBGC's long-term loss with respect to the plans.

Additionally, plan mergers without financial assistance can help protect the benefits of participants in multiemployer plans and make the merged plans more sustainable in the future. In general, mergers can broaden a plan's contribution base, reduce plan administrative and investment expenses, and rescue troubled plans from projected insolvency. Similarly, transfers of assets and liabilities between plans can have a positive impact on all plans involved. Such transfers may result in steady or improved funding to help sustain the plans.

In FY 2020, PBGC issued compliance determinations for four multiemployer plan mergers. These transactions were not related to MPRA. PBGC also issued one compliance determination for a transfer of liabilities and assets between multiemployer plans.

SINGLE-EMPLOYER PROGRAM

The Single-Employer Program covers defined benefit pension plans that generally are sponsored by a single employer. When an underfunded single-employer plan terminates, PBGC steps in to pay participants' benefits up to legal limits set by law. This typically happens when the employer sponsoring an underfunded plan goes bankrupt, ceases operation, or can no longer afford to keep the plan going. PBGC takes over the plan's assets, administration, and payment of benefits up to the legal limits. In some instances, plans can choose to voluntarily terminate by filing what is called a standard termination, if the plan has enough money to pay all benefits owed to participants.

As part of its risk mitigation activities, PBGC identifies transactions and events that may pose risks to plan participants. The Corporation works collaboratively with employers to better safeguard pension benefits.

Standard Terminations

A standard termination is a termination of a plan that has enough money to pay all benefits owed to participants and beneficiaries. A pension plan may be terminated only by following certain specific rules.

In FY 2020, 1,725 plans, covering approximately 190,000 participants, filed standard termination applications with PBGC. The number of terminations received last year is higher than the average of the five previous years.

Approximately 1,597 plans with an aggregate of more than 289,000 participants completed standard terminations in FY 2020 by paying full plan benefits to participants and beneficiaries in the form of annuities or lump sums. Some of the larger standard terminations were: The Florida Health Sciences Center, Inc. Retirement Plan, The Children's Hospital of Philadelphia Pension Account Plan, Bristol-Myers Squibb Company Retirement Income Plan, McKesson Corporation Retirement Plan, Avery Dennison Pension Plan, The Dana Retirement Plan, The Hillshire Brands Company Salaried Pension Plan, The Hillshire Brands Company Consolidated Hourly Pension Plan, and Hasbro Inc. Pension Plan.

PBGC completed 313 standard termination audits in FY 2020 to verify plan sponsors' calculation of participants' benefits upon plan termination. The audits discovered errors that PBGC has confirmed plan sponsors have since corrected, resulting in more than $1.9 million in additional benefits distributed to 1,909 participants in these plans.

Plans Saved

When plan sponsors enter bankruptcy proceedings, PBGC encourages continuation of pension plans. Although bankruptcy forces tough choices that does not mean that pensions must terminate for companies to succeed. In FY 2020, these plans were among those that continued after the bankruptcies of their sponsors or controlled group members, protecting the benefits of participants:

* PG&E (more than 53,150 participants).

* FirstEnergy Solutions, Corp. (more than 41,600 participants).

* Neiman Marcus (more than 10,600 participants).

* Windstream Holdings (more than 8,800 participants).

* McDermott International, Inc. (more than 4,850 participants).

* American Commercial Lines (more than 4,050 participants).

Coverage Pilot and Mediation Programs

In FY 2019, PBGC introduced a one-year pilot program in which, in limited circumstances, employers may request an Opinion Letter about whether a plan in the process of being created is likely to be covered under Title IV of ERISA. In most cases, it is easy to determine if a defined benefit plan is covered by PBGC's insurance program. However, for plans that may be considered a Church plan, a Puerto Rico-based plan, a small professional service plan, or a substantial owner's plan, this may not be clear. Thus, the coverage program assists plan sponsors in understanding whether a plan is covered by PBGC. PBGC developed a form for requesting a determination on whether a plan is covered and posted it to PBGC.gov. This form will streamline and simplify the coverage determination process. PBGC received a limited number of requests for Opinion Letters under the pilot program. Because the COVID-19 pandemic may have impacted submissions, PBGC has extended the pilot program for an additional year to September 30, 2021.

In response to business community comments and concerns, PBGC also created the Mediation Program. This program offers mediation to facilitate resolution of fiduciary breach cases/1 and negotiations with ongoing plan sponsors as part of its Early Warning and Risk Mitigation Program, and former plan sponsors as part of resolving their pension liabilities following termination of underfunded pension plans.

PBGC's practice is to resolve Early Warning issues, termination liability claims, and fiduciary breach cases on a consensual basis with plan sponsors without the need for litigation. This gives plan administrators the opportunity to resolve these cases with a neutral, professional, and independent mediator in a timely and cost-effective manner. PBGC's experienced professionals are committed to achieving settlements that are affordable for each plan sponsor.

GOAL 2: PAYING TIMELY AND ACCURATE BENEFITS

Through its Single-Employer Program, PBGC is directly responsible for the benefits of more than 1.5 million current and future retirees in trusteed pension plans. These Americans count on PBGC to pay their benefits accurately and on time.

Benefits Administration

PBGC becomes trustee of single-employer plans that terminate without enough money to pay all their benefit promises. When PBGC assumes responsibility for a pension plan, the top priority is to make sure the plan's existing retirees continue to receive benefits without interruption. In FY 2020, PBGC took responsibility for 69 single-employer plans that provide pension benefits to nearly 57,000 current and future retirees.

The Corporation paid over $6.1 billion in benefits to more than 984,000 retirees in single-employer plans and nearly 28,000 new retirees applied for benefits. Due to the onset of the COVID-19 pandemic, PBGC's time to process benefit applications grew by 15 days, on average, during the last quarter. The Corporation met its goal of processing 87 percent of benefit applications within 45 days of receipt for the first three quarters of FY 2020. PBGC fell short of its goal by completing only 78 percent within 45 days of receipt by the end of the fiscal year but continued to process 89 percent of benefit applications within 60 days.

After PBGC becomes trustee of a plan, a complex, multiyear process of valuing the plan's assets, reviewing plan and participant data, and calculating final benefits begins. Accuracy of benefit amounts is a priority to the Corporation. When participants are eligible and request to start receiving their benefit, PBGC begins paying them an estimated benefit if the Corporation has not completed the process required to issue a final benefit determination. When the process is complete, participants are informed of their exact benefit amount. In FY 2020, 96 percent of final benefit amounts issued were within 10 percent of the estimated benefit amount, exceeding the performance target of 95 percent.

In recent years, the focus has been on calculating final benefits in PBGC's oldest, largest, and most complex plans. The Corporation has also worked to streamline its processes, improve its technology to support the benefit determination process, and enhance the service provided to its customers. As a result, PBGC issued 70 percent of the final benefit determinations for plans trusteed prior to FY 2018. Average processing times of 5.60 years in FY 2019 have been decreased to 5.3 years in FY 2020.

Reviews and Appeals

When participants and beneficiaries in trusteed single-employer plans disagree with PBGC's determination of their benefit, they have the right to bring their concerns to PBGC's Appeals Board. Employers and plan sponsors may also appeal certain PBGC determinations. The Appeals Board independently reviews each appeal and provides a detailed written explanation of its decision. In FY 2020, the Corporation started with 91 open appeals, accepted 222 new appeals, and closed 249 appeals, with 64 still open at the end of the year. More information regarding PBGC's appeals is available on PBGC.gov.

GOAL 3: MAINTAINING HIGH STANDARDS OF STEWARDSHIP AND ACCOUNTABILITY

Accountability: Measuring and Monitoring Performance

PBGC continuously monitors how well it performs and serves customers using a wide range of performance measures. Among them are how quickly and seamlessly the Corporation pays retirees, accurately calculates benefits, and invests assets. PBGC conducts surveys to help improve the coordination and cooperation essential to meeting customer service goals.

Each quarter, PBGC leadership participates in data-driven discussions covering the Corporation's operations; stewardship and accountability; customer satisfaction; and building and maintaining a model workplace. The strategic use of performance data better informs planning and execution of operations, as well as corporate and program area decision-making.

PBGC'S OWN FINANCES MUST BE SOUND

PBGC's operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit pension plans. In addition, the Corporation is funded by investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans. PBGC receives no funds from taxpayer dollars. The Corporation pays benefits based on federal law and the provisions of the plans it trustees.

Financial Position

The financial status of the Single-Employer Program shows continuous improvement and achieved a positive net position of $15.5 billion at the end of FY 2020. Estimates from PBGC's FY 2019 Projections Report indicate that continued improvement in the financial status of the Single-Employer Program is likely but not guaranteed. The net financial position of the Multiemployer Program improved during FY 2020 to a negative net position of $63.7 billion. While last year's report projected PBGC's Multiemployer Program would become insolvent during FY 2025, this year's projections show a very high likelihood of insolvency during FY 2026 and that insolvency is a near certainty by the end of FY 2027. Both these changes are due primarily to the enactment of the Bipartisan American Miners Act of 2019, which provided federal funding for the United Mine Workers of America 1974 Pension Plan.

Financial Soundness and Financial Integrity

The Corporation protects the pensions of more than 34 million participants whose plan benefits are valued over $3 trillion. PBGC's two insurance programs -- one for single-employer plans and one for multiemployer plans -- are designed to protect a guaranteed amount of participants' pension benefits when plans fail. The programs differ significantly in the extent to which plan benefits are funded as well as in the structure and level of PBGC's premium rates and guarantees. In addition to collecting premiums, PBGC exercises care in the management of approximately $147 billion in total assets. In FY 2020, PBGC attained the 28th consecutive unmodified audit opinion on its financial statements

Collecting Premiums

Premium rates are set by statute and generally indexed for inflation. The Bipartisan Budget Act of 2013, MPRA, and the Bipartisan Budget Act of 2015 specify premium rates or premium increases for certain years. In FY 2020, combined premium cash receipts collected totaled $6.9 billion. Single-Employer Program premium cash receipts collected were $6.6 billion. Separately, Multiemployer Program premium cash receipts in FY 2020 were around $309 million.

In FY 2020, PBGC improved its practitioner-based online filing system - My PAA - through streamlining application features, implementing security upgrades, and installing additional infrastructure advancements to improve user experience.

Investing Prudently

PBGC investment assets are administered by investment management firms subject to PBGC's investment policies and oversight procedures. Procedures for internal controls, due diligence, and risk management are subject to periodic review. Regular and detailed communication with management firms enables the Corporation to stay informed on matters affecting its investment program. For more information, refer to Section VIII Investment Activities.

OUTREACH AND CUSTOMER SERVICE

Customers are at the core of PBGC's mission. To provide customers with the highest level of customer service, PBGC uses surveys to actively listen, identify opportunities for enhancements, implement process improvements, and monitor satisfaction. Scores are based on the widely recognized American Customer Satisfaction Index (ACSI). Major service improvements currently underway include revamping customer-facing systems.

Participants and Retirees

Retirees receiving monthly payments from PBGC gave the Corporation a satisfaction score of 89; the FY 2020 ACSI target score was 90. Retirees continue to be PBGC's most satisfied customer group with scores consistently among the highest in the federal government.

Pension plan participants who called PBGC and responded to a survey scored their satisfaction at 81. While PBGC continues to provide excellent customer service to its callers, an increased demand for benefit estimates has lengthened delivery time.

My Pension Benefit Account (MyPBA) is an online application that allows participants in PBGC-trusteed plans to request estimates, apply for benefits, change their address, or request tax information, and more. MyPBA's FY 2020 score was 78, above target and up a point from FY 2019. MyPBA received high scores for the application's look and feel and use of plain language.

Premium Filers

Pension plan sponsors and their practitioners who file premiums with PBGC gave a FY 2020 satisfaction score of 76, exceeding the target of 74 and comparing very well to similar functions, such as IRS small-business and self-employed tax filers (67) and large-business and international tax filers (60). Filers give excellent scores to PBGC's personal service, written communication, and filing process.

My Pension Administration Account (My PAA) is an online application for pension plan practitioners to file premium information and payments with PBGC. The FY 2020 score was 90, well above the target of 80. Customers gave excellent scores to the content and site performance of My PAA.

In FY 2020, the My PAA practitioner filing system implemented key enhancements for the practitioner community, streamlining the application for the user experience. To better align My PAA with information technology industry standards, PBGC completed additional infrastructure and security upgrades throughout the year.

Engaging with Customers and Stakeholders

PBGC regularly communicates with its customers and other stakeholders through the Corporation's website, email, social media, and other communications tools.

The Corporation's website (PBGC.gov) is regularly updated to provide relevant content to workers, retirees, employers, practitioners, and stakeholders within the pension community. To keep multiple audiences informed, PBGC created a centralized webpage with content regarding COVID-19 and its impact on agency operations.

Customers rated PBGC.gov 73, slightly below the target of 75. PBGC continuously improves the site's overall usability to provide customers with a user-friendly experience, incorporating visitor needs, customer feedback, and plain language principles to convey agency information and updates in a timely manner.

The Corporation also sends regulatory updates and announcements by email to customers and other stakeholders. Additionally, PBGC responds to inquiries from members of Congress, many writing on behalf of their constituents, and various stakeholders.

SUSTAINING THE PROGRAMS

PBGC serves as a source of information about pension and retirement policy. The Corporation implements strategies to strengthen its programs' financial health and improve its ability to manage risks by actively monitoring and reporting on its insurance programs and other relevant information.

Research and Analysis Activities

The Corporation regularly produces analyses and reports of its programs and policy alternatives to the Board of Directors, policymakers, and external stakeholders, including the public. The Pension Insurance Data Book -- a collection of data regarding PBGC and its insurance programs -- is published annually. The Data Book includes multi-year data and statistics about the broader private defined benefit pension system.

PBGC's Projections Report is an annual actuarial evaluation of its future operations and financial status. The report provides 10-year projections of the financial status of both insurance programs under a range of future financial scenarios.

Improvements to the Pension Insurance Modeling System and Related Reports

PBGC's primary forecasting model is the Pension Insurance Modeling System (PIMS). The model is periodically evaluated through a congressionally mandated peer review by outside experts, required under the Moving Ahead for Progress in the 21st Century Act (MAP-21). This year, independent reviews are being performed to evaluate how PIMS models contributions and risk transfer activity in the Single-Employer Program and the projection of active participant counts in the Multiemployer Program. Results are expected in FY 2021. Currently, PBGC is reviewing submitted proposals for a peer review on data inputs and methods in both Single-Employer and Multiemployer PIMS.

PBGC uses these reviews to improve PIMS. The Corporation also uses PIMS to generate results reported in its annual Projections Report, the budget process, to illustrate the effects of proposed changes to pension law, and to provide other technical assistance to policymakers. PBGC has undertaken a multi-year effort to improve the speed and performance of PIMS.

Enterprise Risk Management

During FY 2020, the Corporation continued the implementation of its risk management framework and completed an agency-wide risk assessment. The Corporation's top entity-wide risks were related to the projected Multiemployer Program insolvency. The Risk Management Council worked with program offices to continuously monitor the risks and the associated mitigation strategies.

Other significant milestones include:

* Increased agency-wide communication regarding Enterprise Risk Management (ERM), to foster a risk-aware culture.

* Development of metrics to measure effectiveness of risk mitigation strategies.

* Reevaluation of the Corporation's risk appetite and key indicators due to changes in risk exposure.

* Integration of ERM principles into key decision-making processes, such as strategic planning, organizational performance, and budgeting.

Regulatory and Related Activities

PBGC continues to update its existing regulations, including to protect plan participants and minimize burdens on pension plans and plan sponsors, as part of its ongoing regulatory review. In FY 2020, PBGC published:

* A final rule that makes clarifications, corrections, and improvements to four of PBGC's regulations. For example, the final rule amends the reportable events regulation to eliminate possible duplicative reporting of active participant reductions, clarifies when a liquidation occurs, and provides additional examples for certain reportable events. It also reduces financial and actuarial information reporting under section 4010 of ERISA by eliminating a requirement to submit individual financial information for each controlled group member; provides more time to file a post-distribution certification under a standard termination; and emphasizes that a plan does not qualify for the variable-rate premium exemption for the year in which it completes a standard termination if it engages in a non-de minimis spinoff in the same year.

* A final rule that updates the interest and mortality assumptions used to determine lump sum amounts under PBGC's benefit payments regulation.

* A final rule that updates PBGC's rules for administrative review of the Corporation's decisions.

In FY 2020, PBGC also:

* Complied with a number of Executive Orders on regulations and guidance, including Executive Order 13891, Promoting the Rule of Law Through Improved Agency Guidance Documents, by launching a searchable database that provides direct access to PBGC guidance documents, and by publishing a final rule providing PBGC's procedures on issuing guidance documents.

* Extended deadlines for premium payments and other filings with the Corporation, as part of the government's broader efforts to respond to the COVID-19 pandemic. Due dates for filings or actions that would otherwise have been due between April 1, 2020, and July 15, 2020, were extended to July 15, 2020.

* Posted to PBGC.gov answers to frequently asked questions about how the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) affects missed contribution reporting requirements and premium filings for single-employer plans. The questions and answers also provide general information about the pandemic's impact on PBGC's Single-Employer Insurance Program operations.

* Issued a technical update providing relief related to the timing of contribution receipts that are included in the asset value used to determine certain variable rate premiums due in 2020. Because of this relief, a premium refund will be available to account for employer contributions received by the plan during the extended period provided by the CARES Act for contributions due during 2020. This relief was provided to advance the objective of Executive Order 13924, which directs agencies to use available authority to support economic recovery, including through non-regulatory actions.

* Issued a technical update providing guidance for cooperative and small-employer charity (CSEC) plans on how to submit premium filings for 2019 and 2020 to reflect the retroactive changes made in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) to the way premiums are determined for these plans.

STRENGTHENING A DIVERSE WORKFORCE AND LEADERSHIP

PBGC continues to be committed to maintaining a diverse and inclusive workplace that ensures alignment with strategic goals and outcomes. In FY 2020, the Corporation continued to focus on strengthening employee performance, increasing leadership engagement, expanding health and wellness programs, and recruiting and retaining disabled veterans.

The Partnership for Public Service ranked PBGC in the top five best places to work among small federal agencies. The Corporation ranked fourth out of the 28 agencies in this category.

Federal Employee Viewpoint Survey

While the Federal Employee Viewpoint Survey (FEVS) is often conducted in May and June, the 2020 FEVS was conducted in September and October. Since PBGC is not expected to receive this year's results until early 2021, additional information about PBGC's work environment will be unavailable until next year.

Recruitment and Outreach

PBGC continues to promote recruitment and retention of disabled veterans via corporate and leadership training programs. As a result of the COVID-19 pandemic, PBGC participated in its first virtual career fair in September 2020.

The Corporation hired seven disabled veterans during FY 2020. Currently, the total disabled veteran population at PBGC is 31.

PBGC continues to reach out to veterans on social media such as LinkedIn and Facebook and partners with Military/Recruit, Wounded Warriors, Disabled Veterans of America, and area colleges/universities to share the Corporation's efforts to hire disabled veterans.

In support of mandatory onboarding requirements, including new employee orientation, and in response to COVID-19, PBGC quickly implemented a virtual onboarding process. This included hosting approximately 14 new employee orientations, which resulted in the successful onboarding of more than 80 PBGC new hires.

Diversity and Inclusion

PBGC's Diversity & Inclusion Council (Council) -- which includes employees, affinity groups, and representatives from management and the union -- developed and piloted a Senior Leader Brown Bag series titled "Creating Inclusion in a Virtual Work Environment." The sessions provided a forum for PBGC employees across the Corporation to engage in dialogue and share strategies for creating inclusion in a virtual work environment with senior leaders, colleagues, and co-workers. The Council also continued to offer "Be an Inclusion Agent" training to employees across the Corporation. The training was offered virtually and promoted strategies to create a supportive, welcoming, and collaborative work environment.

The Council formed a new employee resource group at PBGC for First Generation Professionals (FGPs) and those who would like to support or mentor them. FGPs are among the first in their immediate families to attend college or enter a professional work environment. The group's mission is to partner with the Corporation to promote the professional development of FGPs at PBGC.

Performance Management

PBGC's Performance Management Program ensures supervisors have the necessary tools and resources to effectively manage employee conduct as well as employee performance that align with and support organizational goals. In FY 2019, PBGC benchmarked performance management systems at other agencies and identified the best principles to successfully implement a two-tier performance management system agencywide in FY 2020. In addition, in FY 2020, PBGC provided 13 virtual performance management training courses further supporting performance activity.

Equal Employment Opportunity

The Office of Equal Employment Opportunity (OEEO) is responsible for providing leadership in the development, implementation, and evaluation of the Equal Employment Opportunity programs and services within the Corporation. The office provides technical guidance, advice, and equal opportunity support services to PBGC employees and applicants regarding the federal government's equal opportunity program.

The Affirmative Employment Program (AEP) promotes equal employment opportunity by identifying discriminatory employment practices and policies that impede progress for all workforce demographics. The AEP presented events and activities including:

* Curriculum offered through YOUniversity, PBGC's bias awareness program.

* PBGC's Education & Enrichment Book Club, which promotes discussions around equal employment opportunity and diversity in the workplace.

* Equal Employment Opportunity-focused trainings concerning harassment prevention in the workplace.

* Collaboration with Affirmative Employment Committees to identify the employment needs of women, Hispanics, and persons with disabilities and addressing any barriers to opportunity for those groups.

The Corporation met its annual requirement to produce the annual State of the Agency MD-715 report and presented a high-level overview of information regarding PBGC's EEO program to PBGC's Executive Management Committee. The report is available on PBGC.gov.

SAFEGUARDING CUSTOMERS' INTERESTS

Participant and Plan Sponsor Advocate

The PBGC Participant and Plan Sponsor Advocate (the Advocate) is an independent entity within PBGC. The Advocate is selected by PBGC's Board of Directors (the Board) and reports to the Board and Congress. The Advocate acts as a liaison among PBGC, sponsors of insured defined benefit plans, and participants in PBGC-trusteed plans. The duties of the position include advocating for the full attainment of the rights of participants in trusteed plans, as well as assisting participants and plan sponsors in resolving disputes with the Corporation. The Advocate also identifies areas where participants and plan sponsors have persistent problems in dealing with PBGC and may propose changes in PBGC's administrative practices and recommend legislative changes to mitigate problems. The Advocate is statutorily required to submit an annual report to PBGC's congressional committees of jurisdiction, the Board, and PBGC's Director.

The Advocate's annual report, issued on December 31, 2019, recognized PBGC's sustained efforts when handling large volumes of routine transactions that fall neatly within the Corporation's existing policies and procedures. The report described responsive changes by PBGC to address prior Advocate recommendations, including offering informal pre-filing consultations and consolidating potentially omitted participant claims into one department. While these changes have had a positive effect on PBGC's interactions with its customers and the regulated community, the Advocate recommended that PBGC focus on initiatives that will improve its handling of complex cases and issues, as these matters have significant financial consequences for participants, plan sponsors, and PBGC. The Advocate highlighted the need for a critical review and reexamination of PBGC's processes and procedures to ensure that participant and plan sponsor cases are resolved in a timely and transparent manner, particularly when a matter involves multiple departments within the Corporation.

Strengthening E-Government and Information Technology

The Office of Information Technology (OIT) continues to deliver on its strategic goals and objectives as described in PBGC's Information Technology (IT) Strategic Plan. As a result of the COVID-19 pandemic, the Corporation has expanded teleworking capability for its workforce; enabled continuation of operations by delivering laptops, monitors, and other devices to teleworking employees; ensured access to shared drives and collaborative tools; and transitioned PBGC to a higher capacity conference bridge system to meet PBGC's telework needs.

And in addition to the significant accomplishments listed above, PBGC successfully:

* Completed the Office of Management and Budget (OMB) FY 2019 Annual Federal Information Security Management Act (FISMA) Report. PBGC was rated in the top 40 percent of agencies based upon IG FISMA ratings. PBGC improved its FISMA Risk Management Assessment grade from "At-Risk" to "Managed-Risk," while also improving its Security and Privacy Assessment and Authorization Program by updating and publishing PBGC's Risk Management Framework Process.

* Established its independent control assessments, vulnerability analysis, and information security continuous monitoring performance measures into an enterprise wide dashboard, complying with the Department of Homeland Security (DHS) Continuous Diagnostics and Mitigation standard.

* Completed actions related to two DHS Emergency Directives (20-02 and 19-01) and four Binding Operational Directives (18-02, 17-01, 16-03, 16-02) which dealt with mitigating critical cybersecurity vulnerabilities and strengthening government-wide cybersecurity posture.

* Developed and published an enterprise-wide Government-to-Government Shared Services Authorization Guidance (i.e., Authorized-to-Use), the first of its kind among small agencies.

* Provided National Institute of Standards and Technology standard-aligned Security Control Assessment services for security and privacy controls, through an established methodology, to bring risk awareness to stakeholders. Enhancements to the assessment program have had direct impacts on the productivity and quality of assessments that are currently being conducted. The Corporation has successfully assessed 223 controls to date.

* Established a data loss prevention program, which has successfully stopped over 300 possible breaches. Most events captured were accidental and have led to additional training for staff.

* Instituted PBGC's Insider Threat, Privacy & Security Reportal, in partnership with PBGC's Privacy Office, to better protect the Corporation's sensitive data and to improve the ease with which PBGC employees may report an Insider Threat, Privacy, or Security incident.

* Appointed PBGC's Chief Data Officer and constituted and operationalized PBGC's Data Governance Board in accordance with OMB Memorandum M-19-23.

Ensuring Ethical Practices

In FY 2020, PBGC continued to ensure that nearly all employees received initial ethics training within 90 days of their date of hire and that separating employees had the opportunity to meet with an ethics counselor to discuss the rules on post-employment activities. PBGC's ethics team continued its "Ethics in Brief" email notices to all PBGC employees on various topics of interest, including operational changes related to the COVID-19 pandemic and restrictions related to the Hatch Act. The ethics team also conducted a virtual Hatch Act training with over 300 employees in attendance.

Protecting Privacy Interests

Among PBGC's highest priorities is protecting the personal information of its participants, beneficiaries, employees, and contractors. In FY 2020, the Privacy Office continued PBGC's transition from a compliance approach to privacy to a more risk-based approach. While a compliance approach focuses on whether certain criteria are met, a risk-based approach focuses on quality and content. This transition includes reviewing PBGC's systems and processes to optimize the confidentiality, integrity, and availability of the information PBGC maintains.

In FY 2020, PBGC expanded the content of its Information Security and Privacy Awareness course for all PBGC employees and contractors. In addition to content about security incidents and breaches, the course includes content on insider threat and consolidated reporting. PBGC also hosted its annual Privacy Week virtually, which offered training and information about various topics in the privacy field. In addition, PBGC conducted annual inventories of its personally identifiable information holdings, and routinely acted to reduce the use of Social Security numbers to the minimum extent necessary.

Strengthening Transparency & Disclosure

PBGC continues to be a leader in the federal government when it comes to strengthening and promoting transparency. At PBGC, every employee is responsible for compliance with the Freedom of Information Act (FOIA). In FY 2020 the Disclosure Division sponsored 17 training, outreach, and awareness activities focused on promoting transparency and collaboration to ensure efficient and accurate processing of FOIA requests. PBGC also received and processed more than 3,500 FOIA requests during the fiscal year.

While PBGC staff largely worked remotely during the pandemic, the division leveraged the Corporation's use of technology and human capital management to respond to requests and inquiries, while achieving median processing times well below the 20-day statutory time limits. Additionally, the Corporation received a perfect scoring of "100" from the Department of Justice's Office of Information Policy in five key areas: applying a presumption of openness; having an efficient system in place for responding to requests; increasing proactive disclosures; utilizing technology; and reducing any backlogs/improving timeliness.

Full text, including footnote: https://www.pbgc.gov/sites/default/files/pbgc-annual-report-2020.pdf

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