Scott Macey would like to take a huge eraser to some of ERISA's burdensome rules.
Mr. Macey, executive vice president and general counsel for Actuarial Sciences Associates Inc., Somerset, N.J., said some of the rules hurt more than they help.
Top on his list are some of the prohibited transaction rules. The problem is that large investors have had to structure investments in a way to avoid a two-pronged problem - making an investment involving a party-in-interest to the plan and having to apply for a prohibited transaction exemption with the Department of Labor.
Sometimes getting the response to the exemption takes so long that it's too late to make the investment, Mr. Macey said.
"Although well intended, (prohibited transaction exemptions) are an impediment in being a responsible investor," he said.
Mr. Macey - a former AT&T Co. executive who helped oversee the separation of employee benefit plans for the AT&T breakup in 1984 - said he would approve of a plan introduced last year by the Committee on Investment of Employee Benefit Assets, Washington. The CIEBA asked the Labor Department for a prohibited transaction class exemption that would allow funds with assets exceeding $250 million to have in-house asset managers direct non-abusive, party-in-interest transactions without the use of a qualified professional asset manager. This proposal is still pending.
Second on Mr. Macey's list is to fix a recent change in the tax law that reduced to $150,000 the maximum salary level on which companies can base pension benefits. As a result, many companies are creating non-qualified plans to provide retirement benefits for highly compensated employees.
According to a study released last month by Buck Consultants, New York, 12% of the respondents said they will establish a non-qualified defined benefit plan, and 12% will establish a non-qualified defined contribution plan to contend with Congress' $150,000 ceiling.
Mr. Macey noted that executives overseeing the pension fund usually are among a company's highly compensated employees. Taking them out of the mainstream plan may lessen the highly compensated people's concern to take care of the plan's health, he said.
"It's basic human nature, people look out for themselves," Mr. Macey said. "It's just that senior executives have the power."