US pension agency hires Goldman, BlackRock, JPMorgan as gatekeepers

The Pension Benefit Guaranty Corporation, which guarantees the pensions of about 44 million Americans, has hired gatekeepers as it prepares to allocate a portion of its $5.5bn in assets to private equity and real estate.

The Pension Benefit Guaranty Corporation (PBGC) has hired investment firms BlackRock, Goldman Sachs and JPMorgan to manage $2.5 billion in funds that will be allocated to private equity and real estate.

The PBGC, a US federal corporation created under the Employee Retirement Income Security Act of 1974, authorised a portion of its $5.5 billion portfolio to be used for private equity and real estate investments under a “diversified investment policy” adopted in February.

The corporation began looking for firms to manage the private equity and real estate funds in August. PBGC shifted its investment strategy in part to mitigate a $14 billion deficit.

“With our new asset allocation, asset managers with top-tier performance, and the help of excellent strategic partners, PBGC will have a much sounder foundation for the future,” Charles Millard, PBGC director said in a statement.

The corporation chose the three managers because of their “excellent track record in allocating to private equity and real estate”, Millard said. “The firms had to demonstrate their commitment to a complete partnership. They will be required to share information among themselves and give the PBGC unrestricted access to all intellectual firepower within their respective firms.”

PBGC guarantees payment of basic pension benefits earned by about 44 million American workers and retirees participating in more than 30,000 private sector defined benefit pension plans. The corporation’s operations are funded mainly by insurance premiums paid by companies that sponsor pension plans and by PBGC’s investment returns. PBGC receives no funds from general tax revenues.