2014 might seem like deja vu to many retirement plan sponsors.
Issues that were supposed to be on the menu for 2013 — like comprehensive tax reform and lifetime income guidance — are still on the table.
And there will be some complications thrown in, as some key congressional committees get new leaders.
For sponsors of defined benefit plans, 2013 probably felt like The Year of the Target, as they were singled out for hefty increases in PBGC premiums to pay for a swiftly struck federal budget deal at year's end.
Money managers also got some unwanted attention from Washington, as policymakers tried to deal with systemic risk to avert future financial crises. That effort is expected to continue in 2014, “which is going to be entirely about market structure,” said Barbara Novick, vice chairwoman and head of government relations for New York-based BlackRock Inc., who sees regulators trying to learn more about things like high-frequency trading and dark pools, and to put them in a larger, global context.
Retirement plan executives and money managers spent 2013 preparing for comprehensive tax reform, where the discussion included potential revenue raisers like reduced deductions for retirement savings and curtailing the favorable carried interest tax rate afforded to private fund general partners.
The prospects for comprehensive reform dimmed considerably in December when Senate Finance Committee Chairman Max Baucus, D-Mont., was tapped as the next U.S. ambassador to China, and his House counterpart, Ways and Means Committee Chairman Dave Camp, R-Ill., faced challengers for the post. But with retirement tax incentives still on the top 10 list of revenue raisers, the industry's preparations were not a waste of effort.
“We put the time to good use, educating members of Congress and their staff,” said James Klein, president of the American Benefits Council in Washington. “Ultimately, Congress is going to turn their attention to comprehensive reform, and there's no question that retirement plans are going to be in the thick of that discussion.” As budget negotiators turn their attention early in 2014 to a federal debt ceiling increase and other budget issues, “we're by no means out of the woods in terms of targeted efforts to extract a few billion here or there,” from PBGC premiums, Mr. Klein noted. “We have to be vigilant. It's a politically easier lift for the president and Congress” to raise PBGC premiums again.