Fall 2006

By Susan J. White and Jonah Mainzer, Susan J. White and Associates, Inc.

As election season begins and control of the next Congress is in doubt, members are back in their home districts. Many Representatives are campaigning furiously for the right to represent their districts in the 110th Congress in seats that were once thought safe.

Following elections Congress will re-adjourn for the week of November 13 in a lame duck session. Republican Leadership is planning on only being in session for that one week, but with eleven of thirteen Appropriations bills and control of Congress in doubt it is very possible that Congress will need to reconvene in early December in order to finish up this must pass legislation. Another order of business for Congress during that week in November are the new leadership elections and with so many seats in play this year who will be the next Speaker of the House is unknown at this time and will remain that way until at least after the elections.

Public Law 109-280, The Pension Protection Act of 2006

In the hours before the beginning of the August recess Congress was finally able to pass H.R. 4, the Pension Protection Act of 2006, which had been in conference since March. Following passage in Congress the bill was sent to the President and signed into law on August 17.

In addition to addressing the defined benefit concerns of airlines and ongoing contributions to the PBGC fund, the bill expands the ability of financial entities to provide investment advice (Title IV) allows for automatic enrollment in 401 (k) plans-but does not pre-empt state law to do so for state and local employees. Other provisions in this bill include making EGTRRA permanent, clarifying the purchase of service credits, and allowing direct rollovers from plans to Roth IRAs.

The bill does not pre-empt state and local governments regarding automatic enrollment for governmental employees, nor does it allow "non-grandfathered" state and local governments to offer 401(k) plans and it does not require state and local governments to change current dc arrangements in any way (such as closing them and offering 401(k)s only).

Treasury Department Briefing

On September 19, NAGDCA, represented by former NAGDCA President John Barry, Assistant Attorney General, State of Maryland was invited to attend a small briefing at the Treasury Department discussing guidance that was requested by the public interest groups on the Pension Protection Act. Being one of the few groups to submit statements in advance John Barry was able to state some of NAGDCA's concerns with the bill and comment on other presenter's statements. To see the full text of the statement please see the Legislative Counsel Update section of NAGDCA's website.

Save for Retirement Week

On September 13, the Save For Retirement Week Resolution (S. Res. 550) sponsored by Senator's Gordon Smith (R-OR) and Kent Conrad (D-ND) was passed by Unanimous Consent in the Senate declaring the week of October 22 as National Save for Retirement Week. NAGDCA, along with its industry members, had been working with the Senators to write and pass this resolution and with the busy schedule in the Senate it is fortunate that the Senate was able to take the time to pass this resolution.

House Committee on Education and the Workforce Federal Field Hearing

On the heels of Senator Grassley's (R-IA) request to the Government Accounting Office (GAO) to examine the status of funding for state and local government Defined Benefit plans, the House Committee on Education and the Workforce held a field hearing in Springfield, IL during the August recess titled Examining the Retirement Security of State and Local Government Employees. Keith Brainard, of the National Association of State Retirement Administrators, gave a formal statement for the record at that hearing that NAGDCA was a signatory of. This statement is now part of the Congressional record and a full copy can be found at the Legislative Counsel Update section of NAGDCA's website.

The GAO is due to report back on Senator Grassley's request and we are still following the issue for any updates.

Summary

As a follow up to these developments NAGDCA is continuing to work with the Treasury Department on Public Law 109-280, the Pension Protection Act of 2006, and will work with Congress on any other technical legislative issue that may arrive over implementation of this bill. We will continue to work with Senators Smith and Conrad to ensure that the National Save for Retirement Week Resolution is reintroduced in the next Congressional session and that a version of this resolution will be introduced in the House and then sent to the President for his signature.

We look forward to continuing to work with NAGDCA and it's members over any concerns they may have with Public Law 109-280, the Pension Protection Act of 2006, as the process moves forward during the next Congress.