Mr. (and Ms.) Change Comes to Washington

December 8, 2008 ( - For those not already familiar with the mechanics of Washington pension policy making, we thought it would be useful to review, briefly, the key jobs that will be filled as the new Congress and new Administration transition in.

In Congress

In each of the House and the Senate, there are two committees (tax writing and labor/workforce committees) with direct authority over pension issues. In the House these committees are the Ways and Means Committee and the Education and Labor Committee; in the Senate they are the Finance Committee and the Health, Education, Labor, & Pensions (HELP) Committee. Currently and in 2009, Democrats will control each of these committees.

In the House, currently, Charles Rangel (D-NY) is Chairman of the Ways and Means Committee, and Jim McCrery (R-LA) is the Ranking Member (that is, the highest ranking Republican). George Miller (D-CA) is Chairman of the Education and Labor Committee, and Howard McKeon (R-CA) is Ranking Member.

In the Senate, Max Baucus (D-MT) is Chairman of the Finance Committee, and Charles Grassley (R-IA) is Ranking Member. Edward Kennedy (D-MA) is Chairman of the HELP Committee and Mike Enzi (R-WY) is Ranking Member.

Congress will re-organize in January 2009. We would expect leadership of these committees generally to remain the same, with perhaps some shifting around in the minority (Republican) leadership.

There are three key jobs in the Administration with direct responsibility for pension policy. First, at the Department of Labor, the Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA). Generally (and oversimplifying somewhat), this agency has responsibility for ERISA fiduciary rules. EBSA sets policy on issues such as 401(k) plan fees, participant advice and default investments. The current EBSA Assistant Secretary is Bradford Campbell (see White House Taps Bradford Campbell for EBSA Post ). President-elect Obama will be appointing a new Secretary of Labor and he or she will appoint a new head of EBSA. The EBSA Assistant Secretary must be confirmed by the Senate and is, in the pension world, a fairly high profile position.

Second, at the Department of the Treasury, the Benefits Tax Counsel. This position is part of the Treasury Office of Tax Policy. While not as "public" a position as EBSA Assistant Secretary, the Benefits Tax Counsel helps develop and implement administration policy in a variety of areas. This office was, for instance, critical in development of the Bush Administration's defined benefit funding reform proposal, which after many changes became the Pension Protection Act (PPA). Because the Internal Revenue Service is staffed primarily by career civil servants, the Benefits Tax Counsel -- a policy appointment -- can have a critical influence on benefits tax policy. The Current Benefits Tax Counsel is Thomas Reeder. We would expect President-elect Obama's Treasury Secretary to appoint a new Benefits Tax Counsel early in 2009.

Pension Benefit Guaranty Corporation (PBGC)

Third, the Director of the Pension Benefit Guaranty Corporation (PBGC). PBGC, an FDIC-like federal corporation, insures, up to certain limits, unfunded defined benefit plan benefits. In view of the threat of major corporate bankruptcies, PBGC has had a major role in shaping DB funding policy. The more underfunding, the greater PBGC's risk. Often PBGC is the primary advocate for stricter funding standards and recently has cautioned Congress about the risks of relaxing funding standards as part of any stimulus or relief package. The current Director of PBGC is Charles Millard (see Change Agent ). PBGC is overseen by a board of directors that consists of the Secretaries of Commerce, Labor and the Treasury. Again, as the new Administration takes charge, we would expect a new Director of the PBGC to be appointed.