Markey, Miller Press Labor Dept. on Risky Pension Investments
WASHINGTON (October 18, 2012) – Continuing their recent examination of whether commodity index fund investments may run afoul of the Employee Retirement Income Security Act (ERISA), Reps. Ed Markey (D-Mass.) and George Miller (D-Calif.) again wrote to the Department of Labor today expressing concern that the agency does not know the degree to which pensions plans are invested in potentially risky commodity index funds.
Commodity index funds are financial products that allow customers to purchase a wide range of commodities without having to actually physically possess and use those commodities. These funds have grown explosively in recent years and may now be artificially inflating the price of commodities like oil. Commodity index traders now collectively comprise the single largest group of non-commercial participants in commodity markets, giving them significant power over our nation’s commodities markets, and even the power to help set the price of gasoline or home heating oil. Reps. Markey and Miller have previously expressed concern about the possibility that such commodity index funds may be part of a risky commodity bubble similar to the once-inflated subprime mortgage bubble – putting both consumers and pensioners at risk.
“If the Department does not have ready access to much information about defined benefit pension plan investments, we worry that the Department and others cannot determine that all relevant rules and regulations are being followed by defined benefit pension plans,” wrote the two House Democrats.
Reps. Markey and Miller first wrote to the Labor Department on the subject of commodity index funds back in April and received a response to their letter in August. In that response, the Department of Labor indicated that the degree to which pension plans are invested in commodity index funds is not readily accessible to the Department. According to the Department of Labor, because many pension plans manage their investments through a series of trusts, information about the nature of these investments is included on an attachment to a key financial disclosure form filed with the Department.
Yet, because these attachments are not subject to data capture, the Department does not have easy access to this information. As a result, the Department does not currently know just how many of the ten largest private pension plans have 1 percent or more of their assets invested in or benchmarked to commodity index funds.
In their letter today, Reps. Markey and Miller are seeking more information about why the Department of Labor is not currently receiving information about pension plan investments in a way that it can use. The two Congressmen are asking the Department to make changes to its data capture system to ensure that it will have access to this critical information about pension plan investments.