With a considerable amount of nonpension legislation expected from the Democratic leadership within the first 100 hours of the new Congress, action on pensions is expected to be limited to oversight and a technical corrections bill to the 2006 pension reform law.

Incoming Senate Finance Committee Chairman Max Baucus (D-Mont.) told BNA through an aide Dec. 18 that the technical corrections bill to the Pension Protection Act of 2006 (Pub. L. No. 109-280; 159 PBD, 8/18/06; 33 BPR 1985, 8/22/06) is expected to be limited to true corrections but confirmed there is some congressional interest in expanding or modifying certain provisions. Three such targets include airline pension funding relief, tax code Section 420 transfers of retiree health benefits, and the treatment of Indian tribal government plans.

Baucus also is expected to reintroduce his Savings Competitiveness Act (S. 2431); push to extend payroll deduction retirement savings to workers without employer-sponsored retirement plans; and seek to establish Young Saver's Accounts, which would allow parents to start Roth-style individual retirement accounts for their children.

House Financial Services Committee.

Executive compensation may prove to be an irresistible topic for congressional hearings in 2007, with recent news of several high-profile “golden parachute” arrangements for exiting corporate executives. Incoming House Financial Services Committee Chairman Barney Frank (D-Mass.) told the National Press Club in a Jan. 3 speech of his plans to introduce legislation aimed at increasing the ability of shareholders to vote their approval on corporate executive's pay and benefits. “And we're going to try to work out the details, including what happens if they [shareholders] were to vote no,” he added.

Referring to the independent, nongovernmental Financial Services Authority that regulates the United Kingdom's financial services industry, Frank expressed interest in providing American shareholders similar flexibility and “more adequate checks” on executive pay when boards of directors fall short in their oversight authority. He said the Securities and Exchange Commission made real gains in requiring corporations to be more open about what kind of compensation they are paying their executives--including stock options and retirement packages--and what happens if there's a change in the corporation.

“By the way, this compensation for CEOs, it's not just a matter of envy. It has reached a point where it has some macroeconomic significance,” Frank added.

Citing economic analyses, Frank said the figures have shown that the percentage of profit of the top 1,500 corporations that is paid to compensate the top three company officials has reached almost 10 percent.

“We're talking, now, about significant numbers,” Frank said. “When Lee Raymond gets $400 million when he leaves ExxonMobil, and the pension [fund] is shorted, … we're not just talking about envy,” he said.

House Education and Labor Committee.

Rep. George Miller (D-Calif.), incoming chairman of the House Education and Labor Committee, has said he would like to examine how well Section 401(k) defined compensation plans are working, Thomas Kiley, communications director for the Democrats on the committee, told BNA Dec. 19.

Miller and several other Democrats have expressed concern about the conditions under which a pension fiduciary's selection and monitoring of default investments for individuals may limit fiduciary liability under the Department of Labor's proposed rule on automatic enrollment and default investments of Section 401(k) funds, according to Kiley.

Miller, who voted against the Pension Protection Act, expressed broader concerns to reporters after a Dec. 12 news conference that certain workers stood to lose greatly if their workplace pension plans were allowed to terminate. He said he wanted to exhaust all other possibilities before allowing companies to take their underfunded plans to the Pension Benefit Guaranty Corporation for termination.

Miller said that he would exercise the committee's oversight functions to ensure that the stewardship for worker and job protections was operating at the highest standards.

By way of example, he cited his release of a Government Accountability Office study he requested, Private Pensions: Changes Needed to Provide 401(k) Plan Participants and the Department of Labor Better Information on Fees (GAO-07-21), which recommended changes to the defined contribution plan system so that participants and the Labor Department would have increased disclosure of information on fees charged to sponsors and participants of tax code Section 401(k) plans (229 PBD, 12/1/06; 33 BPR 2812, 12/5/06).

By Sheila R. Cherry