That’s because some lawmakers hoping for a Bush administration promise that workers will be adequately protected if their company converts to a cash-balance plan is reportedly threatening to hold hostage the Bush nomination of a new US Treasury Secretary. Cash balance critics have long complained that they disadvantage older workers.
According to news reports, the procedural maneuver to block consideration of railroad executive John Snow to head the US Treasury Department was supported by Senators Dick Durbin (D-Illinois) and Tom Harkin (D- Iowa) as well as US Representatives George Miller, (D-California), and Bernie Sanders, (I-Vermont).
Snow, the chief executive of railroad giant CSX Corp., was nominated in December to replace the controversial Paul O’Neill. Snow, 63, won widespread, bipartisan praise during his confirmation hearing Tuesday, and was unanimously endorsed by the Senate Finance Committee.
The Treasury Department last month proposed regulations for companies to follow when they convert traditional pension plans to cash balance plans, helping them avoid age-discrimination lawsuits. Plan conversions typically mean less money for workers close to retirement age and have triggered a rash of lawsuits (See Treeasury to Offer Cash Balance Clarity ).
Currently there is a moratorium on government approval of the conversions because of those concerns. But that ban would be lifted if the regulations ultimately were adopted.
Industry Opposition: ‘A Search for Headlines’
After the news reports Thursday about the four lawmakers’ parliamentary maneuver, two retirement services industry groups blasted the politicians.
James Klein, president of the American Benefits Council,
said his group was ready to raise its concerns about the
proposed cash-balance plan rules through the normal
“We also have serious substantive concerns with the proposed rules; but, unlike Senator Harkin, we are prepared to follow the process that the law sets forth to submit comments and to argue our point of view on the merits before the Treasury Department,” Klein said in a statement “If the regulatory process proves to be unsatisfactory to anyone interested in these rules the option always exists for Congress to reconsider this matter.”
Mark Ugoretz, president of The ERISA Industry Committee, echoed Klein’s sentiments. “It’s totally inappropriate,” Ugoretz told PLANSPONSOR.com. “It’s all a showhorse tactic and it’s not only unacceptable, it is counterproductive. It’s a search for headlines.”