High Country Times

WASHINGTON – Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) is expanding the investigation into the Biden-Harris administration’s attempt to leverage pension assets to support Big Labor.

Today, Chairwoman Foxx sent letters to Internal Revenue Service (IRS) Commissioner Daniel Werfel and California Public Employees’ Retirement System (CalPERS) President and Vice Chair of Investment Theresa Taylor demanding answers regarding CalPERS’ commitments to divert pension holdings for the benefit of organized labor.

In the letter to Werfel, Foxx writes: “The Committee on Education and the Workforce (Committee) is investigating attempts by the Biden-Harris administration and certain pension funds to leverage retirement assets for the benefit of organized labor. The Internal Revenue Code (Code) makes public pensions eligible for significant tax subsidies if, among other things, their benefits are part of a plan ‘for the exclusive benefit of [an employer’s] employees or their beneficiaries.’ The Committee seeks information to determine whether the law is being undermined by the Biden-Harris administration and violated by certain pension funds. … The Internal Revenue Service (IRS) has an obligation to enforce the provisions of the Code to ensure that taxpayers are not improperly subsidizing a retirement plan that does not, in fact, comply with the Code’s exclusive benefit requirement. To the extent that CalPERS is using plan assets for the benefit of social or political causes, the plan’s tax status is no longer valid.”

In her letter to Taylor, Foxx states: “On April 23, 2024, the Biden-Harris administration touted convening a group of ‘asset owners representing over $1 trillion in public and pension fund capital’ who committed to ‘promote strong labor commitments among funds, asset managers, and companies.’ The Committee understands that you attended the event on behalf of CalPERS, and that CalPERS was one of the asset owners who made this commitment. CalPERS claims significant tax benefits under Code section 401(a). These tax benefits only are available for plans ‘of an employer for the exclusive benefit of his employees or their beneficiaries.’ … CalPERS’ White House commitment and any actions consistent with that commitment would not be ‘for the exclusive benefit’ of employees but instead would be to forward a political and social agenda. The Committee seeks a better understanding of whether labor interests or CalPERS is diverting tax-subsidized retirement assets in violation of the ‘exclusive benefit rule.’”

Foxx concludes by requesting additional information including:

- The process used by CalPERS to determine its compliance with exclusive benefit requirements.

- All documents sufficient to show how CalPERS monitors its use of pension plan assets.

- Any communications regarding whether investment activities may risk violating these requirements.

- All documents related to monitoring expenses paid by CalPERS for activities promoting labor union interests.

- All communications reflecting any activity promoting labor unions' interests.

- The number of enforcement actions taken by IRS against plan sponsors related to this test from FY 2018-2024.

BACKGROUND

On May 22, 2024: Chairwoman Foxx along with Health, Education, Labor, and Pensions Subcommittee Chairman Bob Good (R-VA), sent letters seeking answers about leveraging retirement assets from Acting Secretary of Labor Julie Su; Executive Director Kevin McCormack; NEBF Trustees Lonnie R. Stevenson, David Long, Kenneth W. Cooper; Dennis F. Quebe; North American Building Trades Unions President Sean McGarvey; AFL-CIO President Liz Shuler; International Association Fire Fighters General President Edward A. Kelly; National Education Association President Rebecca S. Pringle.

On June 14, 2024: Information obtained identified CalPERS as participating in using pension assets benefiting organized labor.

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