Home | About NCTR | Resources | Meetings | News Room | Member Directory

Legislative News December 3, 2002

Notice about Delay Expected Soon

Wondering about when Treasury will release the notice to delay the effective date of the temporary regs that include restrictions on certain COLAs and other matters? A Treasury official told me recently that they still haven't sent a date, but that the effort is on the first track.  Moreover, as an indication of their resolve, Tom Terry, a senior IRS official, made a public statement about the delay on November 8.   The temporary regs involve the minimum distribution rules (MDR).  Treasury and IRS officials met with NCTR, NASRA, and NCPERS representatives last month and announced that they will delay the effective date until further notice.

Congress Leaves for Year

The House and Senate adjourned just days before Thanksgiving.  The Senate returns on January 7, 2003.  The House has not yet designated a date.

Before Congress departed they approved the creation of the new Department of Homeland Security and a terrorism insurance bill.  They did not complete bankruptcy reform (which includes pension protections), a prescription drug benefit for Medicare beneficiaries, and pension legislation growing out of the Enron collapse. 

Congress will need to resume work immediately upon return.  Before they adjourned, they agreed to continue federal spending at current levels until January 11, 2003.  This action, known as a continuing resolution, is required because Congress did not complete all of the 13 appropriations bills before the beginning of Fiscal Year 2003, which began on October 1, 2002.  If Congress doesn’t enact the 11 still uncompleted appropriations bills by January 11, 2003, they will need to approve another continuing resolution.

Significant Enactments during 107^th Congress; Challenges Ahead for 108^th Congress

Congress approved two bills during the past two years that change how NCTR members operate.  First, the Economic Growth and Tax Reconciliation Relief Act (EGATRRA) provided significant new ways for public plan participants to purchase service credit, thereby enhancing pension portability.  The Act also allows higher contribution limits that permit individuals to set aside more funds for their retirement. 

Second, the Sarbanes-Oxley Act imposes new, strict rules on the outside auditors of public companies.  The new rules should result in public companies having more reliable financial reports.  This improvement will, in turn, provide better information to institutional investors, such as NCTR members, as they make investment decisions.

Two major issues will challenge us in the near term: the restrictions on COLAs and other issues in the MDR and the pension legislation introduced in response to Enron.  As noted above, we expect Treasury to delay the effective date of the MDR shortly.  We will work with them to modify or eliminate the problematic provisions. 

The Enron legislation introduced in both the House and Senate included expanded regulation of state and local government (SLG) plans.  We understand that a compromise version of the Senate bill drafted a few weeks before adjournment exempted SLG plans from the enlarged regulatory structure. We will work to ensure the preservation of the exemption in whatever bill is introduced in the Senate during the next session.  We will also advocate a similar exemption in the House version of the bill.

NCTR will also become involved in the phased retirement issue.  IRS requested comments about it a few months ago. NCTR will submit comments based on a set of principles recommended by members of the organization's Executive and Legislative Committees as well as other individuals. The comments are due by January 1, 2003.

Other issues likely to arise next year include tax reform (with possible improvements in the pension qualification rules), Medicare overhaul (including a prescription drug benefit), Patients’ Bill of Rights, and bankruptcy.  And then there’s the issue of privatizing Social Security.  The White House has given conflicting signals about whether it will advocate allowing a portion of an individual's Social Security contribution to be privately invested (which NCTR opposes).  Other commentators believe no action on privatization is possible unless the economy improves.

For the final action on issues of concern at adjournment (including the bankruptcy bill, which was considered by the House in the waning days of the session, but not by the Senate), see NCTR's Federal Capsule on www.nctr.org. 

Happy Holidays!