An obscure federal agency tasked with protecting the pensions of employees at bankrupt companies has managed to maintain high-quality services under difficult economic conditions.

The Pension Benefit Guaranty Corporation (PBGC) is the last step for nearly every private company in the U.S. that files for bankruptcy protection. PBGC takes over a company’s pension and guarantees it for retirees.

It’s important to remember that during the recent recession, the people who were sleeping soundly were people whose pensions are insured by PBGC.” – Nancy Hwa

It was in the news last month as it reported its deficit swelled to a $26 billion for 2011, and it may be forced to take over the massive underfunded pensions of American Airlines, which filed for bankruptcy last week.

The numbers look grim but pension officials say it’s in no danger of defaulting or going out of business. It gets no taxpayer money and is funded by premiums paid by private companies. And its a lesson for many other federal agencies that pay out benefits to citizens every month.

“It’s important to remember that during the recent recession, the people who were sleeping soundly were people whose pensions are insured by PBGC,” said Nancy Hwa, spokesperson for the Pension Rights Center, a Washington-based consumer group.

It’s currently paying nearly $5.5 billion in benefits a year to 873,000 retirees in failed pension plans, including brand name companies like Bethlehem Steel, many airlines, including US Airways and Delta and the fruit boutique, Harry & David.

In 2011, its beneficiary list grew by 57,000 new recipients when it stepped in to save newly failed pension plans. Despite the additional demands for its services, it continues to deliver highly praised telephone service and turning around applications in 45-90 days.

The reason for its success: a finely tuned customer service machine and an Internet site that’s so good a claimant can sign up online and never has to use paper or go to an office to apply for coverage.

“We listen to our customers,” said Candace Campbell, deputy director of PBGC’s Benefits Administration & Payments Department.

It’s getting better and better feedback from the American Customer Service Satisfaction Index Survey (ACSI), a University of Michigan annual survey that measures consumer satisfaction across a wide range of public and private sector services. It ranked a score of 86 in 2011 for caller satisfaction, seven points higher than last year’s score of 79 and 21 points higher than the 2010 government aggregate score.

In 2010, the last complete scores, PBGC had an overall score of 87 for its service to benefit recipients, second only to the 94 score from the VA’s National Cemetery Administration.

PBGC is not stopping there. It’s instituted a formal Customer Care Program to increase first-call resolution, reduce customer callbacks, and ensure accurate and timely information. And it is serious about reading customer feedback and making changes when things don’t work.

Among the recent changes as a result of a rigorous responses to feedback:

  • The public complained that PBGC’s letters to pensioners were not clear so the agency rewrote the letters and fixed them.
  • Next the public complained about the messages on the phone system because there were too many voices and confusing messages. So PBGC refined the call system, streamlined messages and now uses the same woman’s voice throughout the message system. And that’s useful for the nearly 600,000 callers a year.

To help deliver stellar service, Campbell said the agency records calls for quality assurance purposes and evaluates whether the caller is getting the right answers.

And it is determined to maintain its signup record for new retirees – 3,000 new retirees are signed up every month and monthly payments begin 45-90 days later, she said.

Now comes the hard part. The agency has proposed increasing premiums and setting prices in accordance with the perceived riskiness of the pension plans it insures. The increase amounts to about $65 a year per employee.

Additionally, the agency wants Congress to cede to it the authority to set future premiums.

“The PBGC has never taken a dime of taxpayer money,” said PBGC director Joshua Gotbaum. “Part of the reason we are asking that our premiums be reformed and raised is so we can continue avoiding asking for taxpayer money.”

Gotbaum has said the PBGC is in no danger of failing. It has $81 billion in its coffers and is getting a 6 percent return on its investments.

“They are running a deficit but it’s also important to remember that funding is cyclical. The money is invested over the long term, and they are able to weather the ups and downs,” Hwa said.