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Lawmakers Mark Up Pension Reform Bill

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The U.S. House Education and the Workforce Committee Thursday reported out a bill that could tighten the rules governing defined benefit plans and give financial services advisors a chance to offer retirement planning help to 401(k) plan members.[@@]

Changes approved by the committee watered-down some of the tough language in a far stronger bill proposed by the Bush administration earlier this year.

The insurance industry opposed the earlier, tougher version of the bill, H.R. 2830, the Pension Protection Act.

H.R. 2830 provides some hope that the defined benefit pension system is not doomed, says Lynn Dudley, a vice president at the American Benefits Council, Washington.

Lawmakers have approached the pension system reform issue with more urgency since UAL Corp., Chicago, decided to turn its pension program over to the Pension Benefit Guaranty Corp., the federal pension insurance program.

Rep. John Boehner, R-Ohio, chairman of the House Education and the Workforce Committee, who authored H.R. 2830 along with House Ways and Means Committee Chairman Bill Thomas, R-Calif., said one of the goals of the bill is to allow employers “to provide rank-and-file workers with access to high-quality investment advice as an employee benefit,” while requiring disclosures to be made by those advisors.

Letting the company that administers a plan provide investment advice to plan members now is prohibited under federal law.

Democrats are still skeptical about the advice provision.

Democrats want to ensure that the advice provided to employees will be truly independent advice, “not advice tainted with advisers who are pushing their own financial products and investment choices,” said committee Ranking Member Rep. George Miller, D-Calif.

H.R. 2830 will now move to the House Ways and Means Committee, where Thomas could roll it into his Social Security reform legislation.