PD2007: CA Democrat Seen as Important Pension Player

That was a key message from members of the opening panel at the PLANSPONSORPlan Designs 2007 conference last month at a Chicago hotel.

A panel of Washington experts told the group that U.S. Representative George Miller of California has stepped to the forefront in a number of retirement-services related areas.

Excessive Fees

Miller has seized the excessive plan fee issue with a vengeance. As a result of hearings by the House Education and Labor Committee (See Congressional Committee Hears 401(k) Fee Disclosure Testimony), which Miller chairs, the Democrat is said to be coming out with a bill mandating additional participant-level disclosure, Bridget Flynn Hagan, Senior Director of Government Relations at Nationwide, asserted.

Helping to fuel Miller’s ardor for the fee issue, according to Hagan:

• having the Democrats in control of both houses of Congress
• the recent Government Accountability Office report on plan fee disclosure (See GAO Urges Congress to Consider 401(k) Plan Fee Disclosure ).
• the recent wave of excessive fee suits – driven in large measure by St. Louis law firm Schlichter, Bogard & Denton (See Lawyer: Excessive Fee Suits Not an Organized Anti-Plan Campaign ).
• attention by the mainstream media to the fee issue.

Add to that mix a close relationship with fellow Californian, Democratic House Speaker Nancy Pelosi and a fee disclosure bill making it out of the House seems likely. “If he wants to do it, ” Hagan asserted, “he is likely to be able to.”

Moving a bill through the U.S. Senate may be a tougher call despite reported plans for Senate hearings on the fee issue likely sometime this fall, she said. If there is a resulting bill, it likely will be more generalized and deal with investment fees on a broader level.

That's not all Miller is apparently thinking about when it comes to the pension space, the panelists said. Employee Retirement Income Security Act (ERISA) lawyer Steve Saxon said Miller is also reported to be considering proposing a radical revamping of permitted retirement plan investments in large measure restricted to traditionally less expensive index offerings- "just real cheap investment funds."

"If it gets through," Saxon said, "that would be a big deal."

Finally, there are reports Miller is considering proposals to deal with potential conflicts of interest by pension consultants, the panelists reported. Miller took the occasion of the recent release of a Government Accountability Office report about the consultant issue to fire off a few new blasts in a news release issued with Representative Ed Markey (D-Massachusetts).

"This report shows that there is potentially a significant cost to workers and retirees when consultants or money managers have conflicts of interest," said Miller "Americans are concerned about having enough money to get them through their golden years. We can't allow the challenge of saving for retirement to be made even more difficult by pension consultants who choose to enrich themselves when they should be acting with pensioners' best interests in mind." (See GAO: Pension Adviser Conflicts Go Unreported . See also IMHO: "Might" Makes Right? )

Hagan also said there are reports of other Congressional lawmakers looking at the issue of retiree health care with one proposal calling for workers to be allowed to use 401(k) funds for health care without suffering any tax penalties.

The Stable Value Wars

According to the panelists, another major Washington development centers on a fierce lobbying battle directed at the Department of Labor (DoL) and the Office of Management and Budget (OMB) ( See DoL Releases Default Investment Option Safe Harbor ). The discussions focuses on whether the DoL should amend its proposed rules for plan default investment options to include stable value funds on its list of approved default funds.

The initially proposed approved default categories now known as qualified default investment alternatives (QDIAs) included:

• lifecycle or targeted-retirement date funds,
• balanced funds, and
• managed accounts

Declared Washington attorney Sherwin Kaplan: "There's been a tremendous amount of push back. The waters have been stirred." Hagan agreed: "To describe it as a battle is accurate."

More information about Miller's pension proposals is here .