PENSION BENEFIT GUARANTY CORPORATION
Annual Management Report
Fiscal Year 2007
November 14, 2007
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2007 Annual Management Report
The Pension Benefit Guaranty Corporation (The PBGC or the Corporation) is a federalcorporation established under the Employee Retirement Income Security Act (ERISA) of 1974,as amended. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in 30,460 private-sector defined benefit pensionplans. The Corporation receives no funds from general tax revenues. Operations are financedlargely by insurance premiums paid by companies that sponsor defined benefit pension plansand by investment income and assets from terminated plans. The following constitutes thePBGC’s Annual Management Report for fiscal year 2007, as required under OMB Circular No. A-136 and A-11, Section 230-1.
Contents
DIRECTOR’S TRANSMITTAL LETTER………………………………………………2
FINANCIAL STATEMENT HIGHLIGHTS……………………………………………4
MANAGEMENT’S DISCUSSION AND ANALYSIS….………………………………..7
MANAGEMENT REPRESENTATION……………………………………………….22
ANNUAL PERFORMANCE REPORT…….…………………………………………..23
CHIEF FINANCIAL OFFICER’S LETTER…….……………………………………...32
FINANCIAL STATEMENTS AND NOTES…………………………………………...34 ACTUARIAL VALUATION……………………………………………………………63
LETTER OF THE INSPECTOR GENERAL………………………………………….66
REPORT OF INDEPENDENT AUDITOR…………………………………………...67MANAGEMENT’S RESPONSE TO REPORT OF INDEPENDENT AUDITOR…...7
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FINANCIAL SUMMARY……..………………………………………………………...7
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Director’s Transmittal Letter
I am pleased to transmit the Pension Benefit Guaranty Corporation’s Annual Management Report forfiscal year 2007. This report includes the PBGC’s financial statements, the transmittal letter of its InspectorGeneral, and the independent auditor’s combined report on the Corporation’s financial statements, internalcontrols, and compliance with laws and regulations. Also included is the Corporation’s AnnualPerformance Report as required under the Government Performance and Results Act. The PBGC is mandated under Title IV of the Employee Retirement Income Security Act of 1974 (ERISA)to insure, subject to statutory limits, pension benefits of participants in covered private defined benefitpension plans in the United States. More specifically, the Corporation’s goals are to safeguard the federalpension insurance system for the benefit of participants, plan sponsors, and other stakeholders, to provideexceptional service to customers and stakeholders, and to exercise effective and efficient stewardship of PBGC resources.During 2007, the PBGC made substantial progress toward these goals. The agency made significant stepsforwardin implementing the premium reform provisions of the Pension Protection Act of 2006 and theDeficit Reduction Act of 2005. It also scored improvements in its efficiency and effectiveness in serving plan participants, retirees, and premium filers, as noted in the Office of Management and Budget’s Program Assessment Rating Tool review. Moreover, the PBGC achieved nearly all of its performance measure targetsfor 2007. As cited in the Annual Performance Report, the PBGC incorporated the principles of the President’sManagement Agenda into its strategic planning process, and achieved noteworthy results in the areas of strategic management of human capital, competitive sourcing, improved financial management, expandedelectronic government and in the measuring of improvement in PBGC performance.
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US Federal Reserve: PBGCAMR
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