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With the focus currently on how President-Elect Trump will staff his new Administration and on the change in control of the Senate, we provide a brief review of the key Congressional leadership as well as the key Administration jobs that President Trump will have to fill, that directly affect retirement savings policy, and some of the issues they will be considering.
Staffing the new Administration
President-elect Trump has designated a new Secretary of the Treasury, investor/hedge fund manager Scott Bessent, and a new Secretary of Labor, Representative Lori Chavez-DeRemer (R-OR).
There are three critical sub-cabinet positions that affect retirement policy: the Department of Labor Assistant Secretary of the Employee Benefits Security Administration (EBSA); the Department of the Treasury Deputy Assistant Secretary (Tax Policy) for Retirement and Health Policy; and the Director of the Pension Benefit Guaranty Corporation.
We will probably have to wait until Mr. Bessent and Ms. Chavez-DeRemer are confirmed to learn (with certainty) who will fill these positions. In what follows, we briefly discuss some of the issues they will confront.
EBSA
The new Assistant Secretary EBSA will have a significant role in setting priorities and driving policy in the areas for which she is responsible, critically, retirement plan fiduciary rules.
Issues at EBSA include:
ESG and proxy guidance – Many Republicans have been critical of DOL’s latest position on these issues.
Fiduciary advice rule – the application of DOL’s most recent fiduciary advice regulation has been stayed by two Texas District Courts, and many believe that it is unlikely to survive a court challenge. There has been considerable pushback by Republicans on this regulation. The new Administration will have to decide whether to continue to defend it, “go back to the drawing board” and try to craft a rule that has a better chance of surviving a court challenge, or scrap this project in its entirety.
Pension Risk transfer – Under SECURE 2.0, DOL is tasked with reviewing its current annuity purchase guidance (Interpretive Bulletin 95-1, aka the “safest available annuity” guidance) to determine whether it should be amended. DOL delivered its report to Congress in June 2024. Its conclusions were open-ended – “EBSA has not concluded that changes to the Interpretive Bulletin are unwarranted. Further exploration into developments in both the life insurance industry and in pension risk transfer practices is necessary to determine whether some of the Interpretive Bulletin’s factors need revision or supplementation and whether additional guidance should be developed.” And a revision to 95-1 remains on DOL regulatory agenda for 2025. There are also a series of lawsuits challenging certain large risk transfer transactions (see our article AT&T sued over 2023 risk transfer).
Lump sum notices – SECURE 2.0 provides for enhanced reporting and disclosure with respect to defined benefit plan lump window elections. DOL has this project on its agenda for 2025.
Retirement Savings Lost and Found implementation – Under SECURE 2.0 DOL is charged with implementing a Retirement Savings Lost and Found. It is currently asking for voluntary cooperation from sponsors to provide the information required to populate the RSLF database. In this regard, we note that DOL recently disclosed that it had been provided access to Form 8955-SSA (“Annual Registration Statement Identifying Participants with Deferred Vested Benefits”), access to which it had previously been denied by IRS.
Disclosure revision – SECURE 2.0 directed the Treasury Department, DOL, and Pension Benefit Guaranty Corporation to “review reporting and disclosure requirements for pension plans … to consolidate, simplify, standardize, and improve such requirements.” This will be a major project across these agencies in 2025.
Treasury/IRS
The new Deputy Assistant Secretary (Tax Policy) for Retirement and Health Policy will have a critical influence on the new Administration’s retirement savings tax policy and, in that regard, a voice in retirement savings tax policy elements of any broader Administration sponsored tax reform effort.
Expiring Trump tax cuts – Many provisions of the 2017 “Tax Cuts and Jobs Act” (AKA the “Trump tax cuts”) are set to expire in 2026, and, with respect to taxation, the major strategic effort of the new Administration will likely be a focus on how those provisions can be extended/made permanent in a context of budget constraints.
SECURE 2.0 implementation – Implementation of SECURE 1.0 and 2.0 Acts. This is an ongoing project requiring relatively “small ball”/relatively un-controversial modifications to current rules that will nevertheless require significant agency attention.
PBGC
The PBGC continues to run a massive surplus in its single-employer program ($54.2 billion for fiscal year 2024), driven by increased premiums that many view as too high, and a related aggressive reduction in DB participant headcount. Industry efforts to persuade policymakers to reduce premiums/reform PBGC’s single-employer plan premium structure continue, but budget pressures are likely to be a major obstacle to any change.
In October 2022, PBGC issued a proposed regulation on the selection of actuarial assumptions to be used in determining withdrawal liability form multiemployer pension plans. PBGC asked for comments and received hundreds of them that were unequivocal both in support of and in opposition to that regulation. The new leadership of PBGC will need to decide whether it will finalize that regulation, re-propose it, or leave the subject unregulated as it has been since the passage of the Multiemployer Pension Plan Amendments Act in 1980.
Changes in Congressional leadership
The new (119th) Congress will take office on January 3, 2025, with Republicans in control of both the Senate and the House.
In both the House of Representatives and the Senate there are two committees with primary jurisdiction over retirement savings policy: In the House, the Ways and Means Committee (responsible for tax policy) and the Education and the Workforce Committee (responsible for “ERISA” issues such as fiduciary responsibility and reporting and disclosure). And in the Senate, the Finance Committee (responsible for tax policy) and the Health, Education, Labor & Pensions (HELP) Committee (responsible for ERISA issues).
Here is our current understanding of who will be leading these key committees.
House Ways and Means: Representative Jason Smith (R-MO) will continue as chairman, and Representative Richard Neal (D-MA) continue as Ranking Member.
House Education and the Workforce: Representative Tim Walberg (R-MI) will take over as Chairman, and Representative Robert C. “Bobby” Scott (D-VA) will continue as Ranking Member.
Senate Finance: Mike Crapo (R-ID) is expected to will take over as Chairman and Ron Wyden (D-OR) will become Ranking Member.
Senate HELP: Bill Cassidy (R-LA) is expected to take over as Chairman and Bernie Sanders (D-VT) will become Ranking Member.
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It is, obviously, still early days. We will update this survey of key retirement savings policymakers as the staffing process progresses.