On February 23, 2018 U.S. Rep. Richard Neal trumpeted his appointment to a new, Joint Select Committee on Solvency and Multiemployer Pensions. In a press release, Neal said “Fundamental to the American dream is the opportunity to enjoy a secure retirement after decades of hard work. But today, our nation faces a retirement crisis as millions of pension plans are nearing insolvency. “I look forward to working with my fellow committee members to find bipartisan solutions that ensure Americans who worked hard and followed the rules don’t live in fear of the rug being pulled out from under them in retirement.”
However, during his career in Congress, Neal has taken numerous steps to undermine retirement security for those in their golden years while reaping gold in the form of campaign contributions from the insurance and financial services industry.
Two of Neal’s most egregious assaults on employee pensions came during the administration of former President George W. Bush. In May 2001, during debate on the Comprehensive Retirement and Pension Reform Act dealing with pension and retirement incentives, then-Rep. Bernie Sanders (I-VT) offered a motion to recommit the bill to the House Education and the Workforce and Ways and Means committees with instructions to add an amendment that would require companies that convert to a cash balance pension system to allow employees the choice to remain in their old pension plans. This was a procedural vote, on a motion to recommit with instructions which basically proposed to return the measure to committee with certain instructions regarding actions the committee, as an agent of the House, should take, like improving the bill. Think of it as sending your order back to the kitchen for a little more cooking and adding the missing seasonings. This vote was to further protect workers’ assets when their company changes a “defined-benefit” pension plan to a “cash-balance” plan. Workers in defined-benefit plans contribute a set percentage of their pay over many years to a pension fund and usually know in advance the value of their pension checks. But a growing number of companies are switching from defined-benefit to cash-balance plans, which, in effect, give workers a lump-sum payment of accrued assets. Critics say these conversions significantly devalue the pension. This effort sought to force companies to keep defined-benefit plans afloat for already-enrolled workers and Neal voted no.
Neal’s second bad vote came on final passage of the Pension Security Act of 2003. This bill provided employees with more leeway to manage defined-contribution pension plans such as 401(k) plans. Employees could sell the company stock in their pension plans three years after a contribution was made. Over five years, they could sell all company stock acquired in retirement plans before the bill’s enactment. Employers would be required to provide employees quarterly statements about their pension plans and could provide them with access to professional investment advice, provided the adviser disclosed fees and potential conflicts of interest. What is wrong with this you might ask? The Economic Policy Institute laid out the case against this bill in their 2003 white paper Retirement made riskier EPI noted that pension wealth is not equally distributed and that “African American and Hispanic retirees are far more likely to experience poverty in retirement. As of 1998, a startling 43% of African Americans and Hispanic workers age 47-64 could expect retirement incomes below the poverty line, compared with 13% of non-Hispanic whites.” The report concluded that the Pension Security Act of 2003 “would make the pension system less secure for workers. The Pension Security Act would erode one of the most important protections for workers by eliminating existing non-discrimination rules and pushing coverage and retirement savings for low- and moderate-income households further out of reach. It would also weaken existing laws that protect employees from conflicts of interest. And the proposed regulations would make it easier for companies to unilaterally reduce the benefits that employees would receive under their defined benefit plans.” Neal voted for the bill and a “yes’ vote was in support of President Bush’s position. Neal was the only member of the then-10-member Massachusetts delegation to vote yes.
In 2016, Neal came under withering criticism for sponsoring a bill to weaken an Obama administration effort by the U.S. Department of Labor to regulate the conduct of investment advisors who counsel people on their retirement plans. The Obama-era plan, called the DOL fiduciary rule, was designed to set standards for putting retiree’s interests first. Among those fighting the DOL regs was Massachusetts Mutual Life Insurance. The Springfield-based firm has been very generous to Neal’s campaign committee giving him more than $391,680 in donations since 1989 and placing the company as Neal’s number one source of campaign cash during his career.
The DOL’s fiduciary rule was set to take effect on June 9, 2017 but that did not happen. On November 27, 2017, the Trump administration announced that the rule would have an 18-month extension from January 1, 2018 to July 1, 2019. Meanwhile, as Bloomberg reported in 2017, “five separate lawsuits now attack the rule from seemingly every angle.” Among the organizations spearheading the legal challenges to the fiduciary rule are several of Neal’s major campaign donors. The National Association of Insurance and Financial Advisors has poured $137,750 into Neal’s campaign coffers since 1989, putting them in third-place among his top contributors. Also suing to overturn the rule are the Financial Services Roundtable and the American Council of Life Insurers. Between 1990 and 2014 the Financial Services Roundtable PAC has given Neal $6,800 while American Council of Life Insurers coughed up $59,499 between 1990 and 2018.
