PBGC Director Nominee Gets Kicked Back to Trump

Gordon Hartogensis

The nomination of Gordon Hartogensis as director of the Pension Benefit Guaranty Corp. (PBGC) has been kicked back to President Trump due to inaction by the US Senate.

In May, Trump nominated Hartogensis to replace PGBC Director Thomas Reeder, who was nominated by President Obama, and whose term was set to end in 2020. In a release announcing the nomination, the White House praised Hartogensis as “an investor and technology sector leader with experience managing financial equities, bonds, private placements, and software development.”

However, the move was criticized for its apparent nepotism, as Hartogensis is the brother-in-law of both Senate Majority Leader Mitch McConnell and Transportation Secretary Elaine Chao. The 2018 legislative session ended without a formal vote on Hartogensis’ appointment, and as a result, Senate rules require the nomination to be returned to the president.

The nomination “raised serious concerns” for Sens. Patty Murray (D-Washington), and Ron Wyden (D-Oregon), who sent a letter to Trump after the announcement demanding an explanation for replacing Reeder with Hartogensis. The senators said Hartogensis “seems to have little to no prior experience relevant to the pension system and the work of the PBGC.”

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The senators added that “we are troubled by this unexpected and seemingly unnecessary change in the agency’s leadership, particularly as the country faces a multiemployer pension crisis.”

They also defended Reeder’s tenure, saying that he has overseen improvements in the single-employer program, and has been a proponent of reforms to help fend off the multiemployer program’s impending insolvency. They added that under Reeder’s leadership, the PBGC’s single-employer program has seen its deficit nearly cut in half.

In November, the Senate Finance Committee convened to vote on three presidential nominations, one of which was Hartogensis’. However, due to the absence of several members of the committee, the vote was postponed and was never rescheduled before the end of the 2018 legislative session.

According to Senate Rule XXXI, paragraph 6, of the Standing Rules of the Senate, “nominations neither confirmed nor rejected during the session at which they are made shall not be acted upon at any succeeding session without being again made to the Senate by the President.”

The PBGC declined to comment for this article.

Tags: Donald Trump, Gordon Hartogensis, PBGC, Pension, Senate

The Florida Retirement System performed well in 2018, but despite that, the reported figures suggest there are some choppy waters ahead.

The pension fund, which covers state, county, schools, and other government workers, saw an 8.9% return on investments in fiscal 2018. It now has $161 billion in assets under management, and is 84.3% funded, according to a Thursday report from the state Auditor General’s office.

The fund is inching closer to its pre-crisis days, when it was fully funded. The 2008 cataclysm heavily impacted its assets, as well as those of many other pension plans in the nation. However, there are a few signs in the current report that there could be some tough times on the horizon.

For one, managers and auditors are not on the same page when it comes to 2019’s return expectations, which are forecasted to be much lower than the returns seen over the previous two years (8.9% last year and 13.7% in 2017). The managers say the fund will return 7.4%, but the auditors think 7% is more likely.

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Additionally, the fund now has had more retirees than contributing members since 2015, and that number is only increasing. This will keep increasing its unfunded liability, now at $29 billion.

“The long-term financial health of all retirement plans is dependent upon several key items: future investment returns, contributions, and future benefit payments,” said the report. “Accordingly, collecting employer and employee contributions as well as earning the assumed long-term rate of return on its investments are essential components of the division’s funding plan to accumulate the assets needed to finance future retirement benefits.”

According to the report, the fund’s target allocations were 54% global equity, 18% fixed income, 11% real estate, 10% private equity, 6% strategic investments, and 1% cash.

The Auditor General’s office could not be reached for comment.

Ash Williams, the Florida State Investment Board’s executive director and chief investment officer, was also unable to be reached for comment. The Florida Retirement System is one of the four pension funds overseen by the board.

Tags: Auditor General, Florida Retirement System, forecasts, Pension, Returns