Retirement issues won’t fade after election

Expect retirement issues to remain in the spotlight in Washington next year, regardless of the outcome of tomorrow’s presidential and congressional elections.

President Clinton’s looming veto of a large Republican tax bill containing a pension package all but guarantees a replay on the subject.

The Republican tax measure failed to garner enough votes in the House to override a veto and had not been voted on in the Senate as of press time.

Sources fully expect the pension bill will be among the top items lawmakers address next year, although the form it takes could hinge on the result of tomorrow’s presidential and congressional elections.

Moreover, the nation’s demographics ensure that retirement-related issues will be discussed in Congress for years to come.

“It is not a matter of one party or one elected official deciding to make it an issue. The issue is bubbling up from below in a way that it can’t be bumped,” says James M. Delaplane Jr., vice president of retirement policy at the American Benefits Council in Washington.

The elections will decide if next year’s incarnation of the big pension bill will take on a more populist tone. Texas Gov. George W. Bush, the Republican candidate, will resurrect the bill next year if he wins the White House.

But he might find his efforts to loosen some pension rules and regulations hampered if the Democrats regain control of the House. Washington political pundits expect it will happen by a tiny margin.

Even so, Mr. Bush would be able to shape pension regulations by appointing new leaders in the federal agencies that oversee retirement-related issues – the Departments of the Treasury and Labor and the Pension Benefit Guaranty Corp.

“It is not clear who these people are going to be or even what is going to be on their agendas,” says David Certner, senior coordinator for economic issues at the AARP in Washington.

Committee appointments

Certainly, fewer changes will take place at the top in the agencies regulating pension issues if Vice President Al Gore wins the White House.

A Gore administration would most likely continue the Clinton administration’s quest for provisions in any pension bill that would encourage low- and middle-income workers to save for their retirement.

Mr. Gore could also be expected to push for provisions that would require companies to give workers more information about changes they make in their pension plans, especially when they convert to cash balance plans.

Still, control of either chamber of Congress is key because the winner sets the agenda through seat assignments on the House Ways and Means and Senate Finance committees.

The Republican majority has 23 seats on the House tax-writing committee, as opposed to 16 seats for the Democrats. On the Senate side, the division is less lopsided – 11-9.

Rep. Charles B. Rangel, D-N.Y., could become the first black chairman of the powerful Ways and Means Committee if Democrats capture the House. He is known as a staunch liberal and would oppose any efforts to loosen the rules applying to so-called top-heavy plans.

And Rep. William J. Coyne, D-Pa., the ranking Democrat on Ways and Means’ oversight subcommittee, probably would bring a very different perspective if he became chairman of that panel.

Mr. Coyne is among the Democrats who recently asked the General Accounting Office to investigate the impact of cash balance plans on retirement income.

He was also crafting a Democratic alternative to the big pension bill – although that effort ultimately never materialized.

“He is a traditional Democrat and interested in the issues and wanting to do the right thing,” says Michele L. Varnhagen, the Democratic labor counsel to the House Committee on Education and the Workforce.

The leadership of that committee, which has jurisdiction over pension issues, will change no matter who is in control in the next Congress. Its chairman, Rep. William F. Goodling, R-Pa., is retiring, as is the ranking Democrat, William Clay of Missouri.

If the Democrats win the House, Rep. George Miller, D-Calif., will become chairman, and Rep. Robert E. Andrews, D-N.J., the ranking Democrat on the Education and the Workforce subcommittee on em-

ployer/employee relations, probably will become chairman of that panel.

Mr. Miller is viewed as an activist but is more interested in health care than in retirement.

Mr. Andrews, on the other hand, has been active on pension issues, recently introducing a comprehensive pension package as a marker for the next session.

Mr. Andrews is “really itching to get into these issues,” says Ms. Varnhagen.

And even if, as expected, the Republicans retain control of the Senate, seven of the 20 lawmakers on the Senate Finance Committee could be new to that panel.

They would have to be brought up to speed not only on tax issues but also on the more arcane pension issues.

The committee could take on more of a partisan tenor with new members coming on board, making it more difficult for pension legislation to clear it.

Chairman William V. Roth Jr. is in a tight race in Delaware. If he loses, but Republicans retain control of the Senate, Sen. Charles E. Grassley, R-Iowa, currently chairman of the Senate Special Committee on Aging, will be in line to assume leadership.

If that happens, experts say, the focus of the committee might tilt from individual retirement accounts to employer-sponsored programs.

“No one has the fervor for IRAs that Roth has,” says Randolf H. Hardock, partner in the Washington law firm of Davis & Harman.

While Mr. Grassley supports the expansion of IRAs, he is better known for his deeper interest in issues relating to employer-sponsored retirement programs.

Mr. Grassley last year co-sponsored, along with Sen. Bob Graham, D-Fla., a big pension bill. Pieces of it were included in the Republican pension bill that the House passed late last month. Mr. Grassley is also seen as more moderate than Mr. Roth.

He would be willing to work more closely with Democrats, although on pension issues his staff is seen as more conservative than Mr. Roth’s.

slimmed-down version

Although the president’s veto of the current tax package is being driven by other issues, his letter to Republican leaders Oct. 26 expressed disappointment over its pension provisions.

In the letter to Speaker of the House J. Dennis Hastert, R-Ill., Mr. Clinton noted that the Republican package did not include tax credits for low- and moderate-income workers that were in the pension bill passed by the Senate Finance Committee Sept. 7.

The Republican pension package would let workers older than 50 contribute up to $5,000 extra to their 401(k) plans. Employers would be required to include those contributions in non-discrimination tests.

The package is a slimmer version of the Comprehensive Retirement Security and Pension Reform Act of 2000, or HR 1102, that cleared the House by an overwhelming vote in July and the Senate Finance Committee in early September.

The bill adopted a provision from the Senate Finance Committee version that would require employers to tell departing employees that they could receive less than the actuarial equivalent of their benefits at retirement age if they opt for lump sums.

Moreover, the latest version of the pension package would define “key employees” in top-heavy plans run by small businesses as executives making more than $115,000.

The House version of the bill would have defined key employees as those making in excess of $150,000; the Senate Finance Committee version would have defined key employees as those making $85,000 or more.

The bill would also let workers save up to $5,000 in tax-deductible IRAs, up from $2,000, and let those older than 50 contribute an additional $1,500.

The bill retained other provisions from the House and Senate versions of the legislation that would let employees contribute more to their employer-sponsored retirement plans – up to $15,000, from $10,500 now; older employees would be able to contribute an extra $5,000 to 401(k)-type retirement plans.

The bill would also make it easier for employers to contribute more to pension plans for their employees, and make it easier for job-hopping Americans to take their retirement savings with them.