PBGC Protects Pensions, Faces $12.9 Billion Deficit

The Pension Benefit Guaranty Corporation is one of those weird birds: a "federal corporation" that receives no general tax revenue.

Instead, according to its Web site, "operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusted by PBGC, and recoveries from the companies formerly responsible for the plans."

While you may not know much about it, PBGC is extremely important to the 44 million Americans whose pensions it protects. 

For example, when Lehman Brothers defaulted on pensions of 22,000 employees in December of 2008, PBGC assumed the responsibility. A record number of pension plans have gone belly-up in recent years stressing the assets of the PBGC to the max.

Now comes word that the PBGC has lots of its own troubles. A new investigation by the Center for Public Integrity exposes startling weaknesses in PBGC's operations. The Center examined hundreds of internal memos, audits and documents and found questionable practices such as: PBGC hiring contractors without knowing that services paid for were actually provided; repeatedly promising corrective actions for problems -- only to have the Inspector General find none had been taken, and more.

The Inspector General also recently criticized PBGC's ex-chief executive for inserting himself in negotiations for lucrative contracts with big name Wall Street bidders looking to manage billions in pension funds. According to the Inspector General, the executive even sought help from a senior Goldman Sachs executive in trying to get a new job in the financial services industry. This after Goldman Sachs received a contract to manage some $700 million in PBGC funds.

And that's not all. There's evidence of a serious privacy breach, in which basic measures to prevent release of pensioners' personal information were not taken.

Check out the report.

PBGC tells the Center for Public Integrity, and CBS News that it takes the critiques seriously and is fixing, or has already fixed, all the problems flagged by CPI and the Inspector General.

Taxpayers should be glad to hear that. PBGC doesn't need to add internal stress to its already troubling financial situation: it's running a $12.9 billion dollar deficit. If PBGC can't get out of the hole, Congress could one day decide to step in with a giant taxpayer bail-out to protect all those millions of pensions.

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    Sharyl Attkisson is a CBS News investigative correspondent based in Washington.