Sen. Charles Schumer, D-N.Y., plans to introduce an amendment to the Senate Finance Committee's pension reform bill that would modify ERISA's prohibited transactions rules, according to a news release from the Senator's office.
The proposal would loosen restrictions in the Employee Retirement Income Security Act that "deny pension plans investment opportunities, stifle competition among service providers and result in duplicative regulatory structures that raise administrative costs," according to the news release. It would update the definition of "plan assets," specifically the provision that currently states that any pension plan with 25% of its assets in alternative investments is subject to ERISA restrictions. The proposal will seek to allow a plan to have 35% to 50% of its assets in alternatives without the ERISA restrictions being triggered, according to Risa Heller, spokeswoman for Mr. Schumer.
"The bottom line is the financial world has changed drastically since 1974 when ERISA was originally passed. At that time, there were no IRA or 401(k) accounts," Mr. Schumer said in a statement. "This is just one important and obvious reason why ERISA needs re-evaluation and reform sooner rather than later."