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Chamber Hails DOL Limitations on Improper Shareholder Activism

Thursday, October 16, 2008 - 8:00pm

New Interpretive Bulletins Provide Guidance for Pension Fiduciaries

WASHINGTON, D.C. — The U.S. Chamber of Commerce welcomed the U.S. Department of Labor's (DOL) revision of Clinton-era Interpretive Bulletins related to ERISA that had encouraged union pension fiduciaries to become more aggressive shareholder activists. The revisions clarify that pension plans must be managed for the sole interest of beneficiaries and not used to advance political, social and other unrelated objectives that provide no economic benefit to fund retirees.

"Given the current economic turmoil, the last thing union members need is for pension fund managers to play political roulette with their retirement dollars," said Chamber Chief Legal Officer and General Counsel Steven Law. "This action by the Department of Labor will help prevent the abuse of pension funds to promote political agendas at the expense of beneficiaries and retirees."

The Interpretive Bulletins build on two recent Advisory Opinion Letters from DOL's Employee Benefits Standards Administration (EBSA) placing limits on the activities in which pension funds can engage. The first letter stated that shareholder activism must result in a clear economic benefit to plan participants, as demonstrated by a substantive cost-benefit analysis, and cannot be used to advance unrelated social and political goals and "myriad public policy preferences." The second letter stated that pension funds cannot be used to promote union organizing, particular organizing methods — such as Card Check — or particular collective bargaining objectives.

In July, the Chamber unveiled a study by Navigant Consulting showing that certain shareholder resolutions advanced by union pension funds provided no benefit for pension plan participants, and may have actually reduced shareholder value at targeted companies. For a copy of the report, go to: http://www.uschamber.com/publications/reports/080722wfi_shareholder.htm

"The Chamber's research proved that a lot of union pension activism is financially worthless for union pension beneficiaries," concluded Law. "The Department's new Bulletins make political joyriding on members' pensions against the law."

The U.S. Chamber is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

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