WASHINGTON -- The former director of the government's pension agency took the Fifth Amendment Wednesday when senators asked about allegations that he had inappropriate contacts with Wall Street firms while running the operation, which insures the pensions of 44 million Americans.

Charles E.F. Millard denies that he had improper communications with the firms that recently won multimillion-dollar contracts to advise the agency on a new strategy to invest its assets more heavily in stocks, real estate and private equity rather than more conservative fixed-income treasury securities.

In a statement issued before the hearing, Millard's attorney Stanley Brand questioned the Senate Special Committee on Aging's jurisdiction in the matter. He said he advised Millard to assert his constitutional rights because he believes certain members of Congress appear to have already reached negative conclusions about his client's actions.

"I decline to answer any and all questions," Millard said.

The allegations were contained in a PBGC inspector general's report last week that said Millard's office had hundreds of phone conversations and e-mails with the Wall Street firms bidding for the work in 2007 and 2008 at the same time he was actively evaluating their proposals.

"The draft report was published on a committee Web site and senators were calling for further investigations before the report was even final," Brand said. "The Fifth Amendment protects innocent people against hostile environments. And Congress's recent actions and statements have created a biased and hostile environment toward Mr. Millard."

The hearing was held at a time when the rapidly deteriorating financial health of the PBGC is raising alarms in Congress. Key lawmakers are demanding tougher rules to ensure vigilant oversight of its multibillion-dollar investment portfolio.

The recession is forcing into bankruptcy an increasing number of companies with underfunded pension plans, leaving the PBGC with billions of dollars more to pay out in pension checks to retirees in the future. Its long-term deficit tripled in the past six months to a startling $33.5 billion.

The PBGC says it will be able to meet its obligations for many years to come. Still, it is monitoring weak companies with underfunded employer-sponsored pension plans in all sectors of the slumping economy, including auto, retail, financial services and health care.

"Given the state of the economy, the question of PBGC's viability is more urgent than ever," said Sen. Herb Kohl, D-Wis., who chaired the hearing. "One in seven Americans count on this agency to pay out their pension in case their employer cannot due to bankruptcy. As General Motors teeters on the edge of insolvency, hundreds of thousands of workers' pensions could soon become the responsibility of the PBGC. And though Chrysler has managed to maintain its pension plan despite filing for bankruptcy, it may be only a matter of time before PBGC will have to accept responsibility for that pension plan as well."

In response to the inspector general's and his committee's own probe, Kohl has called for the contracts with the Wall Street firms to be rebid and that if they are not, his committee will ask the Government Accountability Office's special investigations unit to review communications the committee staff has received from the firms that won the contracts.

Kohl also is introducing legislation in coming weeks that will require the agency's presidentially appointed director to remove himself from potential conflicts of interest. The bill also will expand and strengthen the PBGC's board of directors. Kohl has called for the contracts to be rebid.

Three members of the president's Cabinet oversee the government's multibillion-dollar safety net for retirement benefits covered by employer-sponsored plans; 401(k) plans are not insured by the agency. Representatives for the secretaries of treasury, commerce and labor meet regularly, but in 28 years, the full PBGC board has met only 19 times. Kohl's bill would force the board to meet more frequently and stagger membership to make sure experienced board members are serving at all times.

In February 2008, during Millard's tenure, the board approved a new investment strategy that would invest the PBGC's assets more heavily in private equities and real estate. Millard remains convinced that more aggressive investments will help reduce the agency's deficit and perhaps prevent the need for a future taxpayer bailout. To help implement the new strategy, the agency solicited the services of investment firms on Wall Street.

Goldman Sachs, BlackRock and JPMorgan won awards to invest up to $2.5 billion of PBGC assets in real estate and private equity in return for fees that could exceed $100 million over 10 years. So far, no agency assets have been transferred to the three firms. PBGC's acting director, Vince Snowbarger, said Tuesday that the staff was working with the new board members in the Obama administration to decide whether the contracts should be terminated.