Government agencies are stuck in a disagreement over how much oversight is necessary to protect $68 billion in invested assets and fix a $14 billion deficit.

The Government Accountability Office says the board of the Pension Benefit Guaranty Corp. isn’t adequately overseeing implementation of the investment policy for the PBGC’s $68 billion in invested funds, especially considering the staff of the PBGC took a detour from the stated investment policy to try to improve the PBGC’s overall financial condition.

The PBGC is the government bailout agency for failed private pension plans, protecting retirement funds for more than 44 million Americans. The board of the PBGC—comprised of the secretaries of Commerce, Labor, and Treasury—undertook a biennial review of PBGC’s investment policy for the first time in 2004. At that time, the board instructed PBGC staff to limit exposure to financial risk by reducing equity holdings to a range of 15 to 25 percent of total investments, according to the GAO.

By 2008, that policy goal had not been attained, with the PBGC staff reporting that high equity returns and low fixed-income returns made it difficult to reach the target allocation and that flexibility in the policy provided latitude to veer from the stated course to improve the overall financial condition. “While PBGC’s director and staff kept the board apprised of its investment performance and asset allocation, the GAO found no indication that the board had approved the deviation from its established policy or expected PBGC to continue to reduce the proportion of equities to meet the policy objectives,” the GAO wrote in its recently published report.

The PBGC says it is reviewing the GAO’s recommendations, which include improvements to how the board monitors achievement of investment policy goals and additional analysis of the new investment policy. “We do not believe that a system of verbal agreement and informal guidance is strong enough oversight for investing $68 billion,” the GAO wrote. “The successful implementation of this policy, which invests in a broader range of assets, will require close monitoring and consistent oversight.”

So far, the PBGC’s board is standing its ground. Labor Secretary Elaine Chao, who chairs the board, said in her response to the GAO findings: “The Board believes that the presentations by the PBGC and verbal agreement and informal guidance by the Board and the Board Representatives to the PBGC is appropriate oversight.”