When President Barack Obama in 2010 named Joshua Gotbaum, then an operating partner at private equity firm Blue Wolf Capital Partners L.L.C. in New York, as director of the Pension Benefit Guaranty Corp., the agency's problems were well-known. It had a huge deficit and a shrinking premium base as employers moved away from defined benefit plans. In a recent interview with Editor-at-Large Jerry Geisel, Mr. Gotbaum discussed those and other issues facing the PBGC and the nation's defined benefit pension plan system.

Q: Since the PBGC was established nearly 40 years ago, the premiums paid by employers with defined benefit plans have risen from $1 to $49 per plan participant, with more increases set for 2015 and 2016. If premiums keep going up, isn't there a risk that more and more employers will exit the defined benefit plan system?

A: Yes. There is and always has been a risk that PBGC premiums might be a reason why an employer would decide to go with a non-PBGC-insured plan. However, throughout history, PBGC premiums have almost never been the deciding factor. In the last couple of years, however, the Congress — not PBGC — has raised single-employer premiums very dramatically to the point where some plan sponsors have said, “We already were thinking about de-risking. And what has happened in Congress has given us an additional reason for doing it now.”

That's why it's important to note that this administration and the previous administration proposed an entirely different kind of premium system, a system that actually took risk into account.

Q: That has not gotten much traction? Why not?

A: Thus far, it has not been enacted. There have been consequences of that inaction. I have had many employers tell me the reason they are offering lump sums to deferred vested employees is because they pay the same premium for a deferred vested obligation of $1,000 as they do for an ongoing obligation of tens of thousands of dollars. The current system does not offer the flexibility that employers need in their employee benefit plans. When you look at the decisions of employers to leave the defined benefit plan system, they are not doing it because they don't want to provide retirement security to their employees; they are doing it because the current offerings imposed too much cost on them.

Q: What would it take for that congressional inaction to become action?

A: With the current premium structure, PBGC's multiemployer program will run out of money within eight to 10 years. Congress has a choice: Within the next several years, they can bail out PBGC with taxpayer funds; they can let the agency run out of money so more than a million people won't get their pensions; or they can find a way to let PBGC set premiums that will permit the agency to do its job without driving employers away from offering pensions entirely.

Q: The number of employers offering defined benefit plans has declined dramatically. Is the day coming when there won't be any more defined benefit plans?

A: The PBGC insures plans covering roughly 40 million Americans. My view of it is that insuring the retirement security of 40 million Americans is worth doing. Part of the way to preserve their retirement security is by preserving employers' ability to offer these plans. That means we have to make sure that employers have the flexibility to be able to do this.

I think one of the unfortunate consequences of the history of regulation of employee benefits is that we have narrowed options rather than expanded them. We have reduced flexibility rather than increasing it.

One unfortunate result of the way we have regulated defined benefit plans is that employers have decided that they would rather not offer them. Is it worth preserving them? I think the answer is clearly yes.

Q: Financially, the agency has a $27 billion deficit in its single-employer insurance program. In theory, you are going to run out of money one day. Is that the reality?

A: Anyone who tells you that a particular institution that works in the world of pensions is or is not going to run out of money is kidding themselves.

We have chosen to do a few things: We have proposed a premium regime that makes more sense, is more affordable and can enable the PBGC to do its job.

The other things we are trying to do is to preserve plans as much as possible. When American Airlines filed for bankruptcy, they announced they could not afford their pension plans. It turned out that was not true. And the very knowledgeable people of the PBGC, who pay a great deal of attention to what businesses can and cannot afford, recognized that American could be reorganized in other ways. And that is what happened. As a result, American's pension plans covering 130,000 people were not terminated.

Q: What have been PBGC's accomplishments in its 40 years?

A: There are 130,000 American Airlines employees and retirees who have a pension because the PBGC worked on their behalf. There are 1.5 million people in America who worked at hundreds of businesses that have failed and get a pension from the PBGC. I hope it is the case that in future years, people will look back and will say the PBGC helped preserve their retirement, and that the agency stepped in and provided good benefits when their employers' pension plans failed.