Boehner sticks with advice bill

WASHINGTON — Rep. John Boehner, R-Ohio, is not giving up on his investment advice bill. Nor is the Bush administration.

Sources say Mr. Boehner, chairman of the House Education and the Workforce Committee, hopes pending legislation on the benchmark for pension liabilities will be acted upon quickly, clearing the way for the investment advice legislation to be taken up next. Kevin Smith, a spokesman for Mr. Boehner, said the advice bill could be included during House-Senate negotiations over a broader pension package, but the Senate needs to pass its version of the pension legislation first.

Mr. Boehner has two ways to proceed: he could persuade key senators to include his advice provision in the Senate pension bill, or he could hope to get his provision in during last-minute horse trading between the Senate and House versions of the pension package. Mr. Boehner is apparently choosing the latter course.

H.R. 1000 (the Pension Security Act), which includes the investment advice provision introduced by Mr. Boehner, passed the House last May but has stalled in the Senate. The advice provision of the bill would allow employers to make investment advice available to plan participants through qualified investment advisers, including the plans' own service providers.

Meanwhile, Assistant Labor Secretary Ann Combs said that the widening mutual fund scandal creates a greater need for participants to have advice about their retirement investments. "It's just absolutely clear that people need investment advice," she said in an interview. The legislation would be "a step forward from the current situation."

Currently, the Employee Retirement Income Security Act forbids investment advisers that collect fees for managing some or all of a retirement plan's investment options from offering investment advice to participants. Mr. Boehner's bill would eliminate those prohibitions, but it would still hold plan sponsors liable for selecting and monitoring the investment advisers, and those offering the advice would have a fiduciary duty to make sure it is solely in the best interests of participants. They would also have to disclose the fees they collect on the different investment options to investors.

J. Scott DeFife, senior policy adviser to House Minority Whip Steny Hoyer, D-Md., said Mr. Boehner might consider floating the investment advice provision as a separate bill. Mr. DeFife made his observation during a speech at the National Conference on Public Employee Retirement Systems in Washington earlier this month.

That would not be the first time. In November 2001, the proposal initially passed the House as a stand-alone measure. It has since been rolled into other broader pension legislation.

Still, Mr. Boehner's investment advice legislation could face an uphill battle because the recent mutual fund scandals have raised concerns about investor protections. "When small mutual fund investors appear to be getting hoodwinked, it makes (the bill) a tougher climb," said a source who declined to be identified.

Officials at the American Council of Life Insurers hope that isn't the case. "All of us who believe in the bill think it's important to get investment advice to participants and hope that the mutual fund situation has not thrown cold water on it," said Angela Arnett, a lobbyist for the Washington-based trade group. "We think it has many safeguards for participants — the adviser has to be a fiduciary (and) there has to be full disclosure."

The Senate's version of thecomprehensive pension bill — the National Employee Savings and Trust Equity Guarantee Act —passed the Senate Finance Committee on Sept. 17, but was not taken up by the full Senate before the end of the session.

There are still hopes that the Senate will move ahead. Sources say top Senate Republicans have promised Sen. Charles E. Grassley, R-Iowa, chairman of the Senate Finance Committee, to make available time on the Senate floor for the legislation to be taken up this year, but there is no indication yet of when that would happen.

The Senate legislation includes an alternative investment advice provision, sponsored by Sens. Jeff Bingaman, D-N.M., and Susan Collins, R-Maine. That provision would shield plan sponsors from liability for advice provided to participants by qualified investment advisers, so long as they are SEC-registered investment advisers, banks or insurance companies — but not the plan's service provider.

For Mr. Boehner's advice proposal to pass, he would have to be willing to amend his legislation so a compromise can be reached with Mr. Bingaman. So far, Mr. Boehner has shown no inclination to compromise.

"It'll never happen unless they make a deal with Bingaman," noted Brian H. Graff, executive director of the Arlington, Va.-based American Society of Pension Actuaries, which opposes the Boehner bill.

There's also the overriding problem of time in an election year. Because of the compressed legislative schedule and a number of other pending bills competing for attention, there's little guarantee that the pension bill would even be considered by the Senate this year.