Rep. Neal Undermines Retirement Security While Taking Campaign Contributions from the Insurance and Financial Services Industry
(July 30, 2018 - Chicopee) On February 23, 2018, U.S. Rep. Richard Neal boasted his appointment to a new Joint Select Committee on Solvency and Multiemployer Pensions. In a press release, Rep. 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.”
Although Rep. Neal claims he is committed to resolving the retirement crisis, his congressional record shows quite the opposite. During his long tenure, Rep. Neal has taken numerous steps to undermine retirement security for Americans, all while raking in significant campaign contributions from the insurance and financial services industry.
In May 2001, during debate on the Comprehensive Retirement and Pension Reform Act, 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 converting to a cash balance pension system to give employees the choice to remain in their old pension plans. This vote would 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 the value of their pension checks in advance. However, 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. The amendment was an effort to protect workers by forcing companies to keep defined-benefit plans afloat for workers already enrolled, but Rep. Neal voted against recommitting the bill to add this amendment.
Again, Rep. Neal voted against the interests of retirement security in the final passage of the Pension Security Act of 2003. This bill provided employees with more liberty 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. 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.” Rep. Neal was the only member of the Massachusetts delegation to vote yes on the bill, a vote that supported then President Bush’s position.
In 2016, Rep. Neal came under 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 regulations was Massachusetts Mutual Life Insurance, a Springfield-based firm which has donated more than $391,690 to Rep. Neal’s campaign committee since 1989, making the company Rep. Neal’s number one source of campaign contributions during his career.
The DOL’s fiduciary rule was set to take effect on June 9, 2017, but it 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 last year, “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 Rep. Neal’s major campaign donors including the National Association of Insurance and Financial Advisors, which has contributed $137,750 to Rep. Neal’s campaign since 1989 (putting them in third-place among his top contributors), the Financial Services Roundtable, whose PAC has given Rep. Neal $6,800 between 1990 and 2014, and the American Council of Life Insurers, which has contributed $59,499 between 1990 and 2018.
“It is disingenuous at best, and shameful at worst, for Neal to now proclaim himself as a savior of people’s pensions when his voting record and actions ultimately support the insurance and finance sector, and not the people,” said Tahirah Amatul-Wadud who is challenging Rep. Neal in the September 4 Democratic primary.