DoL: Keep Plan Assets out of SS Policy Debate

May 4, 2005 ( - A US Department of Labor (DoL) official has issued a stern warning against plan sponsors using plan assets to lobby for or against Social Security reform or to get similarly involved in other public policy issues.

The warning came  in a letter from Alan Lebowitz, deputy assistant secretary for program operations in the Employee Benefits Security Administration to Jonathan Hiatt, general counsel of the AFL-CIO in Washington.

Using plan assets to influence public debate or making plan administration decisions based on a particular provider’s public policy stance would violate the Employee Retirement Income Security Act (ERISA), Lebowitz contended.

“The Department reiterates its view that plan fiduciaries may not increase expenses, sacrifice investment returns, or reduce the security of plan benefits in order promote collateral goals,” Lebowitz wrote to Hiatt. “A fiduciary’s reconsideration of its current service providers based solely upon the service provider’s view on Social Security would raise grave concerns about the prudence and loyalty of the fiduciary’s actions. Similarly, a fiduciary could not, consistent with the duties of prudence and loyalty, simply exclude qualified service providers from consideration in hiring based solely upon their views on Social Security policy.”   

The Lebowitz letter was prompted by complaints from two prominent US House Republicans that the union was improperly lobbying against the Bush Social Security reforms. House Education & the Workforce Committee Chairman Representative John Boehner (R-Ohio) and Employer-Employee Relations Subcommittee Chairman Representative Sam Johnson (R-Texas) asserted that such the department should look into whether federal labor and pension laws were violated by what the lawmakers said were union efforts to pressure financial firms and brokerage houses to oppose Bush’s plan (See  Two Lawmakers Call for DoL Probe of Union SS Reform Lobbying).


Boehner and Johnson complained about public protest and picketing of the target financial services firms, as well as tacit and/or explicit notice to these firms that if they support the President’s proposal, the union will withdraw its assets and invest through brokerages they find more politically palatable.

“Plans are important participants in the national economy and are generally affected by legislation, regulations, actions and events which affect the economy as a whole such as Social Security policy,” Lebowitz wrote. “This simple fact does not convert every legislative or regulatory proposal concerning the economy into a rationale for spending plan assets on the policy debate. If a fiduciary could characterize an “educational” expense as “plan administration” merely by positing some connection between the particularly policy at issue and the broad economic interests of ERISA-covered plans, there would be virtually no limit to the range of such expenses that would be permissible.…The Department rejects a construction of ERISA which would render the Act’s tight limits on the use of plan assets illusory, and which would permit plan fiduciaries to tap into ERISA trusts to promote myriad public policy preferences rather than to pay benefits and engage in plan administration with undivided loyalty.”

In a statement Wednesday, Boehner applauded the Lebowitz letter. “The Department has made clear that union leaders violate federal law if they threaten to withdraw pension assets from a financial firm simply because it has a differing view on the importance of reforming Social Security,” said Boehner.  “We should have an open and honest discussion over how to save Social Security for future generations, but no special interest should be breaking federal law in its quest to influence the debate.”