WASHINGTON -- House Democrats are gearing up to introduce comprehensive legislation speeding up the process through which service providers and vendors can get exemptions from federal pension law.
The bill would not, however, abolish prohibited transactions, as retirement plan providers had recommended in recent congressional hearings.
The Employee Retirement Income Security Act places a broad ban on certain transactions between pension funds, their investment advisers and others considered fiduciaries to the plan.
In recent hearings, industry representatives asked lawmakers to remove those bans. But Democrats on the House Education and the Workforce Committee are not prepared to go that far.
"Employer arguments to get rid of the prohibited transaction rules and go just for fiduciary standards are not acceptable," said a Democratic aide.
Rep. Robert E. Andrews, D-N.J., the senior Democrat on the House Employer/Employee Relations subcommittee, is leading the push for the legislation, which will be drafted in coming weeks. Mr. Andrews and Rep. John Boehner, R-Ohio, chairman of the subcommittee, are working on a bipartisan pension bill. Mr. Andrews and the other Democrats on the committee hope that the bipartisan bill will incorporate some of the items from their wish list.
Labor stumbling block
On that list is a provision that would make it easier for vendors to offer plan participants investment advice, but objections from labor unions have been a stumbling block on how much to ease up.
The AFL-CIO is concerned about the potential for conflicts of interests when service providers recommend participants invest in funds on which the providers would earn higher fees.
In recent hearings, industry representatives argued that warning participants about such possible conflicts should be enough.
Mr. Andrews "wants a bill that all Democrats can support and, at this point, the AFL-CIO is uncomfortable about going too far in this area," said the Democratic aide.
Mr. Andrews' staff, the labor groups and the Labor Department hope to reach some kind of acceptable middle ground on this provision soon, which has broad support from employers, employees and outside vendors.
"Everybody agrees that there should be meaningful, useful advice, but the issue we have not figured out is, `Can you overcome a possible conflict,' " the aide observed.
The bill also would seek to improve coverage by adopting the Clinton administration's proposal for speeding up vesting of defined contribution plans to three years from five if workers are vested all at once, or to five years from seven, if workers are vested over time.
Includes rollover proposal
The bill also will incorporate a proposal from Mr. Clinton's fiscal 2001 budget that would automatically roll over retirement money into specified individual retirement accounts when workers quit their jobs. Employers could pick a default option for those workers who fail to specify in advance where they want their money to be rolled over.
The legislation also would include a provision that would let workers in between jobs borrow from their retirement money to pay for emergency health care problems, and, possibly, job training expenses.
The legislation also would draw from Mr. Andrews' previous bill, introduced last year, that would make it easier for women to get their fair share of pensions in case of divorce or death of a spouse who is a participant in a retirement plan. Moreover, the bill would seek to ensure that women covered by the Civil Service Retirement System or the Railroad Retirement System would have the same protection as women participating in private pension plans.
Finally, the legislation would give participants better information about their retirement plan investments and proxy votes. It also would spell out the time over which employees may file a claim for benefits, as well as how much time employers have to respond, and ensure that participants suing over benefits receive attorneys' fees.
"All ERISA says is you have to have a full and fair review, but employers don't always comply with them," the aide said.
