- The Washington Times - Wednesday, May 4, 2005

The Labor Department this week cautioned the AFL-CIO not to use money from pension funds in its campaign to defeat President Bush’s Social Security reform plan.

“The Department is very concerned about the potential use of plan assets to promote particular policy positions,” states a May 3 letter sent by Alan Lebowitz, deputy assistant secretary for program operations at the Employee Benefits Security Administration, to AFL-CIO’s general counsel. The letter also warns that officials who administer the pension plans shouldn’t hire or fire service providers based solely on their views of Social Security reform.

The AFL-CIO is a strong opponent of Mr. Bush’s idea to divert a portion of Social Security payroll taxes into personal retirement accounts.

Mr. Lebowitz cites recent reports that AFL-CIO officials have said it’s OK for union trustees to use pension assets to inform plan participants about the Social Security debate and to hire or fire plan service providers based on their views on the matter.

Republican Reps. John A. Boehner of Ohio and Sam Johnson of Texas sent a letter on March 18 to the department requesting an investigation and citing press reports that the AFL-CIO has been unlawfully pressuring financial firms and brokerage interests to drop their support of the president’s proposal.

AFL-CIO attorney Damon Silvers said yesterday the union agrees with the Labor Department letter.

Pension funds shouldn’t be used to lobby and are not, he said.

But in some circumstances, where a pension fund is directly tied to Social Security, the plan manager should be allowed to educate members, he said.

“We’re talking about education, only in some circumstances,” Mr. Silvers said, adding that he is “not sure we have a disagreement” with the Labor Department on this point.

When it comes hiring-firing guidelines, he said the letter “confirms the position that we have been taking,” in which AFL-CIO reviews a firm’s position on Social Security as a “collateral issue,” and not as the sole basis for a decision.

Mr. Lebowitz warns that using pension funds to lobby in most instances violates the Employee Retirement Income Security Act (ERISA). He directs the union to disseminate these guidelines to affiliates, which Mr. Silvers said is being done.

In their March 18 letter to the department, Mr. Boehner and Mr. Johnson raised “deep concern” over press accounts that investment firms Waddell & Reed Financial Inc. and Edward D. Jones & Co. withdrew their support for the Social Security reform in the face of union pressure, including public protest and picketing, and threats that the union will take its business elsewhere if the firm supports Mr. Bush’s proposal. Other firms are being targeted as well.

But Mr. Silvers said Mr. Boehner was wrong to assert it’s against the law to picket firms, for individuals to withdraw their money, or for unions to withdraw union treasury money — not pension money — from an investment firm they don’t like.

“It’s our right to do that,” Mr. Silvers said.

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