WASHINGTON - Rep. Marcy Kaptur, D-Ohio, is resurrecting a 7-year-old bill that would force employers to share control of pension funds with employees.
The 1989 bill, sponsored by Rep. Peter J. Visclosky, D-Ind., prompted a storm of protest from some of the nation's largest companies; their forceful lobbying efforts killed the measure. But proponents of the new bill think organized labor could push this idea through.
In its draft form, the bill requires all assets of single-employer pension plans to be held in trust by a joint board of trustees, similar to those for multiemployer plans. The board would have two or more trustees from each side.
No one from Ms. Kaptur's office would comment on the details. One staff member said Ms. Kaptur, who does not sit on any of the House committees that deal with most pension issues, hopes to introduce a bill sometime this year.
The legislation is intended to give employees more control over their pension plans and to give working families more retirement security, the staff member said.
Mr. Visclosky's bill, introduced in July 1989, had little movement in the House until it was suddenly attached as an amendment to a budget reconciliation bill. The business community revolted, as did top executives from some of the nation's largest companies. They said the bill would have inflicted serious damage to the nation's private pension system.
Rep. Marge Roukema, R-N.J., led a successful fight to strip the amendment from the budget bill.
Like Ms. Kaptur, Mr. Visclosky wanted employees to have a larger say in their plan investments. It was proposed at a time when pension assets were being used as sweeteners in takeovers and leveraged buy-outs (Pensions & Investments, Oct. 2, 1989).
Opponents say the takeover/buy-out threats no longer exist. They were surprised Ms. Kaptur would propose such a bill, after the pounding it received in 1989.
Gina Mitchell, director of government relations for the Financial Executives Institute, Washington, said if Ms. Kaptur's proposal is anything like Mr. Visclosky's bill, "we would adamantly oppose it." FEI's 14,000 members are chief financial officers, treasurers and other executives from Fortune 500 companies.
Lynn Dudley, vice president, retirement policy at the Association for Private Pension and Welfare Plans, Washington, said Ms. Kaptur's proposal threatens private pension plans because of the increased cost and complicated administrative pressure the joint trusteeship would place on employers.
"If I were a plan sponsor, there's no way ... I'd put a plan in if it had to have a joint trusteeship with my employees," Ms. Dudley said. "That's not the purpose of a retirement plan from a business perspective."
She also pointed out employees are getting more control over their retirement assets with the increase in employee-directed 401(k) plans.
But members of the union pension community are elated that Ms. Kaptur is reviving the bill.
"We think that any prudent attempt to allow the employees of a company to have a say in the administration and investment of the plan is a positive step," said Michael Steed, senior vice president of investments for Union Labor Life Insurance Co. Inc., Washington.
Teresa Ghilarducci, assistant professor of economics at the University of Notre Dame, South Bend, Ind., noted employees are more loyal and productive when they are given a say in how their workplace is managed.
"Can we extend what has happened in the (workplace) to the investment boardroom? I think we can," said Ms. Ghilarducci. She also said increased investment returns have not produced increased benefits for private plan participants.
"The run-up on Wall Street should trickle down to Main Street and it hasn't. Workers on boards may change that."
Mr. Steed said management can no longer say, as it did in 1989, that investment returns would be considerably lower with a jointly trusteed board.
According to data compiled by SEI Capital Resources, Chicago, Taft-Hartley pension plans were the top performers in 1995, with a median return of 29.6%; corporate pension funds with more than $100 million in assets returned 27.5%, and corporate funds with less than $100 million returned 27.1%, SEI reported (P&I, March 18).
Jointly trusteed plans "are taking on more risk, and you really can't see a difference between rates of return" between those funds and private plans, Ms. Ghilarducci said. "That wasn't true in 1989."
"Jointly trusteed plans do not change the basic tenets of ERISA - of diversifying investments and prudently selecting investments," Mr. Steed said.