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Congressional Update: Multiple Employer Plans, New DOL Secretary

Congress is in the middle of a four-week, in-session work period before Members head out of town for the traditional August recess. Last week, the House of Representatives passed legislation to delay both the employer and the individual mandate under the Affordable Care Act for one year, as well as legislation reauthorizing federal education programs. These initiatives stand little chance in the Senate. Last week, the Senate narrowly averted changing long-standing rules regarding executive branch nominations. In return, Senate Republicans agreed to allow votes on President Obama’s remaining cabinet nominees and on posts to lead the Consumer Financial Protection Bureau and fill the National Labor Relations Board. This week, the House of Representatives will consider legislation to fund the Department of Defense and pass two energy bills. The Senate will consider a bill to fund the federal Transportation and Housing Departments and could take up a compromise bill to address the interest rates on federal student loans.

On Tuesday, July 16, the Senate Committee on Health, Labor, Education and Pensions held a hearing to examine issues relating to both multiple employer defined benefit and defined contribution plans. Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Health, Labor, Education and Pensions and Senator Pat Roberts (R-KS) a fellow Committee member, introduced legislation to coincide with the hearing. The “Cooperative and Small Employer Charity Pension Flexibility Act of 2013,” eases funding rules imposed by the Pension Protection Act on cooperatives and small employer charities that operate multiple employer defined benefit plans, but allow those organizations that want to be subject to the PPA rules to make a permanent election to that effect. The legislation also provides for a “time out” from scheduled PBCG premium increases on these entities, freezing premiums at current levels while PBCG reevaluates how much these plans should be paying for pension insurance.

Issues relating to multiple employer defined contribution plans were also examined. Testimony provided by the Government Accountability Office highlighted that no publicly available information has been collected on employers who sponsor multiple employer defined contribution plans since 2004. In addition, regulatory uncertainty regarding such arrangements has increased significantly since the Department of Labor determined last year that some multiple employer pension plan arrangements made up of otherwise unrelated employers did not constitute a single pension plan under ERISA.

On Thursday, July 18, the Senate confirmed Thomas Perez as Secretary of the Department of Labor on a straight party line vote as part of the deal that was struck between Senate Democrats and Republicans on executive branch nominations. He was confirmed by a narrower margin than any of President Obama’s cabinet nominees. It remains to be seen what impact he will have on the regulatory process regarding the update of the definition of fiduciary under ERISA.

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