WASHINGTON - The Senate Finance Committee has delayed action on the long-awaited post-Enron pension reform proposals.
The committee had hoped to mark up the legislation before the Memorial Day recess, but lawmakers' preoccupation with other matters, including a trade bill and welfare reform, have pushed the pension legislation lower down on the "To Do" list. Now, it looks like the committee won't be voting on a pension bill until late June, and the delay could keep the issue alive until after the elections.
"They're waffling on all of this and might want to hold this until the fall and use it as a political issue," observed Brian H. Graff, executive director of the American Society of Pension Actuaries, Arlington, Va.
Randolf Hardock, partner at the Washington law firm of Davis & Harman, concurs. "Democrats have virtually no incentive to let the president sign a bill," he noted.
The Republican-controlled House on April 11 passed a pension measure intended to safeguard workers' retirement savings from another Enron-type blowout. The Senate Health, Education, Labor and Pensions Committee marked up its version on March 21. But the bill that emerges from the Senate Finance Committee, which holds sway over tax matters, is crucial because it is expected to be the blueprint for action by the full Senate.
Meanwhile, the AFL-CIO and the AARP have launched a nationwide grass-roots campaign to counteract a lobbying blitz by the investment industry and other business groups. Organized labor and the retirees' group are opposing a provision that would permit retirement plan providers to offer investment advice to plan participants.
The provision, introduced by Rep. John Boehner, R-Ohio, and chairman of the House Education and the Workforce Committee, was part of the broad pension legislation that passed the House but has come under fire in the Democrat-controlled Senate as weakening current protections against conflicts-of-interests in federal pension law.
In recent weeks, Mr. Boehner's office has urged senators to co-sponsor the Senate companion to his investment advice legislation, introduced by Sen. Tim Hutchinson, R-Ark. The American Council of Life Insurers, the Teachers Insurance and Annuity Association - College Retirement Equities Fund and NASDAQ also have been lobbying aggressively for the inclusion of Mr. Boehner's investment advice provision in Senate pension legislation.
But the AFL-CIO and the AARP support the Independent Investment Advice Act, introduced last fall by Sens. Jeff Bingaman, D-N.M., and Susan Collins, R-Maine, which would keep intact the current prohibitions in federal pension law against retirement service providers' offering investment advice, but would allow plan sponsors to offer professional investment advice without fear of liability (Pensions & Investments, March 4).
That was part of the Democratic pension bill approved by the Health, Education, Labor and Pensions Committee in March.
Under the chairmanship of Sen. Edward M. Kennedy, D-Mass., the committee approved a package that has alarmed both pension plan sponsors and plan service providers.
Hundreds of people have attended eight town hall meetings held by the AFL-CIO since early April. There, former Enron Corp. employees - as well as employees of the now-bankrupt Polaroid Corp., Lucent Technologies Inc., LTV Corp. and Global Crossing Ltd. - discussed their retirement savings losses resulting from the financial problems of their employers.
Four more meetings are scheduled.
A hue and cry
The aim is to flood senators with letters, e-mails and telephone calls in hopes the Senate will pass The Protecting America's Pensions Act, S. 1992, as the legislation from Mr. Kennedy's committee is known.
This legislation includes the Bingaman-Collins provision.
"We are asking folks to contact their senators to support the Kennedy bill," said Shaun O'Brien, senior policy analyst at the AFL-CIO.
Meanwhile, thousands of AARP members have contacted lawmakers to ensure Mr. Boehner's investment advice legislation does not get included in pension legislation in the Senate, said David Certner, senior coordinator for economic issues at the Washington-based organization.
"We do need to step up our efforts because there is a lot of (lobbying) on this issue," Mr. Certner said.
An impasse over investment advice could mean the Senate punts on the issue when the pension bill reaches the floor. Sen. Charles E. Grassley, R-Iowa, angered the Bush administration when he did not include the investment advice provision in his legislation - the National Employee Savings and Trust Equity Guarantee Act - which is expected to be the starting point for the Senate Finance Committee's legislation.
Sen. Max Baucus, D-Mont., who has worked closely on pension legislation with Mr. Grassley, has reiterated his desire for a bill that is agreeable to both parties.
Members of the Senate Finance Committee have discussed with Mr. Kennedy that their bill would include only tax provisions, allowing for a smooth melding of the bills from the two committees later on.
But some of the provisions in the Kennedy bill are considered unpalatable to Finance Committee members, who traditionally are more conservative than their labor committee counterparts.
A number of provisions from the Kennedy bill have alarmed employers, including one that would require joint trusteeship of defined contribution plans.
Senate sources acknowledge investment advice is unlikely to be part of the final pension package on which the full Senate votes. Still, the Finance Committee's pension package is likely to include the Bingaman-Collins provision because Mr. Bingaman sits on the Senate Finance Committee and because the committee wants to show it has taken a stance on the issue.