House Bill Passed -- If Adopted, Would Modernize Pension Fund Investment

On July 28, 2006, the House of Representatives passed H.R. 4, the Pension Protection Act of 2006, by a vote of 279-131 with strong bipartisan support. The Senate may act on the legislation as early as this week, although it is not yet clear that H.R. 4 will become law as passed by the House. In the attached memorandum, we analyze only the provisions of H.R. 4 that deal with investment of the assets of individual retirement accounts, Keogh plans and other plans subject to Section 4975 of the Internal Revenue Code and of plans subject to the Employee Retirement Income Security Act of 1974, as amended. As described in the memorandum, H.R. 4 would, if adopted, make several far-reaching changes to the fiduciary responsibility provisions of ERISA and the related provisions of the Code, which would lead to more efficient execution of financial transactions and permit plans to engage in many transactions on terms determined by a fiduciary to be prudent. A copy of the provisions of H.R. 4 discussed in the memorandum is also attached.

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To view the subsequent alert, Changes to Pension Fund Investment Rules Approved by Senate, Expected to Become Law, click here.