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Senate Finance Committee Passes Pension Reform Bill

The Senate Finance Committee voted unanimously to pass legislation originally introduced as the "National Employee Savings and Trust Equity Guarantee Act" (NESTEG). Senate Finance Committee Chair, Max Baucus (D-MT), brought his modified version of the bill, authored by Ranking Minority Member, Charles Grassley (R-IA), before the committee in a markup session on July 11, 2002. Baucus' version retained the major portions of the original bill and added sections on investment advice and executive compensation. The bill passed the committee without much discussion or argument.

In addition to other provisions, the Chairman attached investment advice legislation, introduced previously by Senators Susan Collins (R-ME) and Jeff Bingaman (D-NM). This would exempt employers for advice provided by an independent provider, which varies from the House version of investment advice. That version, sponsored by Representative John Boehner (R-OH) and passed along with President Bush's version of pension reform, would allow advice to be provided by plan administrators. The SVIA has been working to educate both houses of Congress about the usefulness of Stable Value and the importance of investment advice in retirement savings. The association has backed a version of advice legislation passed by the House of Representatives.

Sen. Baucus must now work with Sen. Edward Kennedy (D-MA), chair of the Health, Education, Labor, and Pensions Committee (HELP), which recently passed its own version of pension reform. That work will likely take place through August, with legislation brought to the floor after the summer recess. If the Senate legislation is passed, the bill would then be reconciled with the House bill. All of this reduces the likelihood of passage, as both houses of Congress plan to adjourn for the year on or around October 4.

On a related note, Sen. Kennedy has attached portions of his original bill to the Senate's version of corporate accountability. The main focus of this is to penalize executives who mislead stockholders and employees regarding the strength of the company. As reported above, Sen. Kennedy will have to work with the Finance Committee to reconcile their bills.

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