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Presidential Election The election of Barack Obama as the 44th President has not only invigorated the Democratic Party but with the size of the electoral victory President-Elect Obama may well have a national mandate for reform. The current state of the economy, and a possible economic stimulus will be at the forefront of any legislation passed at the start of the 111th Congress. Congressional Elections The unpopularity of President Bush seemed to trump low Congressional approval ratings as Democrats were able to make gains in both Chambers of Congress. Committee leadership for key committees will not change in either Chamber and in the only major leadership election in the House Representative Eric Cantor (R-VA) was elected as Minority Whip replacing Representative Roy Blunt (R-MO) who chose not return as Minority Whip. In the Senate, Democrats currently have gained six seats and one more seat is currently in the middle of a recount. Additionally, President-Elect Obama’s senate seat currently remains unfilled and with the recent indictment of Governor Rod Blagojevich it is unknown how long that will remain unfilled. Democrats were unable reach the filibuster proof sixty seats and will therefore have to work with Republicans Senator Gordon Smith (R-OR) was defeated in his bid for a third term. During his two terms in the Senate, Senator Smith has been on the forefront for retirement issues and it was with his leadership that National Save for Retirement Week was first passed in 2006. In the House, Democrats gained twenty-one seats giving them 257 moving into the 111th Congress. Enough House seats are held by conservative “Blue Dog” Democrats that the Democratic leadership will not have cart blanche to pass any new spending but will still have to abide by the “Pay-go” rules that were put in place for the 110th Congress. Cabinet President-Elect Obama has named about half of his cabinet positions and most of these choices are expected to have bi-partisan Senate approval. Timothy Geithner, President of the Federal Reserve Bank of New York has been chosen as Secretary of the Treasury and a former Secretary, Lawrence Summers, has been named as Director, National Economic Council. In the final weeks of the 110th Congress attempted to pass a limited bailout to help the automakers in Detroit. Long negotiations produced an agreement between the Administration and Congressional Democrats but a number of Senate Republicans opposed the measure and without the necessary 60 votes the measure did not pass the Senate. A new bailout, combined with an economic stimulus, is expected to take up a majority of time in the first weeks of the Obama Administration. President-Elect Obama is expected to tackle the war in Iraq and health care reform early in his Administration as well. Pension reform is not currently a top priority for a new Obama Administration but he does oppose privatizing Social Security. Obama has indicated that he would also ask individuals with salaries higher than $250,000 to pay between 2-4% more, split between employer and employee, into Social Security to insure solvency. Other possible reforms include reforming corporate bankruptcy laws to protect workers and retirees, create automatic workplace pensions, expand retirement savings incentives for working families and preventing age discrimination National Save for Retirement Week The defeat of Senator Smith leaves National Save for Retirement Week without a Republican Senator as co-sponsor. NAGDCA is currently seeking a new Republican Senate sponsor to ensure that this resolution remains bi-partisan. We will continue to work with Senator Conrad (D-ND) and Chairman of the Senate Committee on the Budget as the other major co-sponsor of the Resolution. Representative Allyson Schwartz (D-PA) and Representative Sam Johnson (R-TX) were both re-elected to the House and we will work with them to ensure their continued co-sponsorship in that chamber. After many months, both the House and Senate were passed H.R. 7327 (The Worker, Retiree, and Employer Protection Act of 2008). This legislation includes technical corrections affecting cash balance plans, asset smoothing and market rates of return for governmental plans. Provisions of the bill include:?allowing single-employer plans three years to phase in pension funding target percentages under the Pension Protection Act of 2006 (PPA), permitting single-employer plans to temporarily adjust PPA’s plan contribution, distribution, and projected earnings provisions, allowing multiemployer plans to freeze the funding status of their plans to allow time for economic recovery, letting multiemployer plans elect a three-year extension of current amortization rules to help offset asset losses in 2008, temporarily suspend limits on benefit accruals for participants in underfunded pension plans and implementing technical corrections to provisions of the PPA affecting cash balance pension plans, asset smoothing, market rates of return for governmental plans, and other issues. The IRS recently announced that they are extending the deadline to satisfy the recent 403(b) regulations to December 31, 2009. The IRS will consider plans as having fulfilled the requirements if during 2009 the plan sponsor operates the plan in accordance with a reasonable interpretation of the regulations and if the plan sponsor makes its best effort to retroactively correct any failures in 2009. NAGDCA looks forward to working with the 111th Congress and with the new Administration. We will continue to monitor issues related to fees, transparency, pension reform and other matters that have been raised on Capitol Hill and will continue to be the voice for state and local government defined contribution plans as those discussions move forward.
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