PBGC

We interrupt the life insurance variable annuity program to bring this wonderful piece of news:

Just as stocks and other risky assets began to crater the Pension Benefit Guarantee Corp (PBGC) upped its allocation to risky assets. This from a government agency whose existence becomes essential in a time of declining risk allocations.

PBGC works like this: collect premiums from pension funds so that if a pension fund sponsor goes belly up and the pension plan has an unfunded liability (its assets are less than its liabilities), the PBGC makes up the difference. Basically, it insures pension plans.

So what on earth would possess these guys to strap on the same risks as the very funds they are insuring? Talk about misunderstanding one's place in the world.