Tuesday's election might be bad news for Democrats, but their pain could result in a gain for the retirement industry, said James M. Delaplane Jr., a partner at the Washington law firm of Davis & Harman LLP and a keynote speaker at Pensions & Investments' West Coast Defined Contribution Conference, held Oct. 24-26 in San Francisco.
Delaplane: Retirement issues would take back seat with big GOP victory
The gain would be in the form of little legislative action on retirement issues over the next two years if control of Congress is split between the two parties, Mr. Delaplane said. He predicted the GOP will win the House and that the Democrats will narrowly maintain control of the Senate.
“Retirement is not high on the Republicans' agenda,” said Mr. Delaplane, noting that the GOP's recent “Pledge to America” contained only a passing reference to Social Security but no other comments on — or prescriptions for — retirement investing and savings issues.
“The action (affecting the retirement industry) will be primarily regulatory,” as it has been for most of this year, he said.
If the Republicans win the House, Rep. George Miller, D-Calif., will lose chairmanship of the House Education and Labor Committee. Mr. Miller is “the most potent legislator on retirement issues over the last several years,” Mr. Delaplane said.
Also, a GOP-controlled House would likely mean that Rep. John Boehner, R-Ohio, would become speaker. When the GOP previously controlled the House, Mr. Boehner chaired the committee now chaired by Mr. Miller. “He's maintained an interest, and he understands our industry,” Mr. Delaplane said of Mr. Boehner. “He's more knowledgeable (about retirement issues) than the average (House) member.”
A GOP-controlled House can be expected to discourage passage of any legislation requiring mandates for sponsors, Mr. Delaplane said. Even under Democratic control, attempts to require index funds and annuities in DC plans were rebuffed, he noted. With the GOP in charge, the House “will be less skeptical of provider and sponsor motives,” he said.
A GOP majority in the House also should mean greater protection for tax incentives now in place for retirement plans, he said.
Although there may be legislative gridlock for the next two years, which probably means no significant action on deficit-reduction and tax reform, Mr. Delaplane said the retirement industry still must deal with enacted, proposed and pending regulations.
In November, the Department of Labor is expected to issue proposed regulations on disclosure requirements for target-date funds when used as qualified default investment alternatives. That disclosure should encompass fees and risk, he said.