Pension Benefit Guaranty Corp has new investment plan

WASHINGTON, Feb 18 (Reuters) - The Pension Benefit Guaranty Corp. said on Monday it has adopted a new investment policy designed to increase chances the government pension guarantor will be fully-funded within 10 years.

"The PBGC is responsible for the pensions of 1.3 million Americans, but we don't currently have the resources to keep all of our future commitments," director Charles Millard said in a statement announcing the policy.

The PBGC, a federal but privately funded corporation created by Congress in 1974 to guarantee payment of basic pension benefits for roughly 44 million American workers and retirees, had an accumulated deficit of $14 billion at the end of 2007.

"The new investment policy adopted by the PBGC Board of Directors will better manage our invested assets," Millard said. He added that although it should generate higher returns, it also offers lower risk through broader diversification.

The new investment strategy is pegged to give the corporation a 57 percent likelihood of full funding within 10 years, compared with a 19 percent chance under the previous policy, Millard said.

The PBGC currently has about $55 billion to invest in the new investment policy, under which 45 percent of assets will be allocated to a diversified set of fixed-income investments. Another 45 percent will be allocated to diversified equity investment and 10 percent to alternative investment classes.

The agency's previous policy set a much smaller equity investment target of 15 to 25 percent.

The latest investment policy was adopted after a review that began in mid 2007. The board reviews its investment policy every two years.

(Reporting By Joanne Morrison; Editing by Dan Grebler)