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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To the extent that CalPERS is using plan assets for the benefit of social or political causes, the plan’s tax status is no longer valid.”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 the letter to Taylor, Foxx writes: “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 the exclusive benefit requirements of Code section 401(a).
• All documents sufficient to show CalPERS’ monitoring its use of pension plan assets for the exclusive benefit requirements of Code section 401(a).
• Any communications regarding whether investment activities may be at risk of violating the exclusive benefit requirements of Code section 401(a).
• All documents related to monitoring expenses paid by CalPERS for any activities to promote labor union interests.
• All communications and materials or records of negotiations reflecting any activity to promote the interests of labor unions. 
• The number of enforcement actions the IRS has taken against plan sponsors related to the “exclusive benefit” test in FY 2018-2024.

To read the full letter to Werfel, click here.
To read the full letter to Taylor, click here.
 
BACKGROUND

• May 22, 2024: Chairwoman Foxx and Health, Education, Labor, and Pensions Subcommittee Chairman Bob Good (R-VA) sent letters to Acting Secretary of Labor Julie Su; Executive Director of the National Electrical Benefit Fund Investments (NEBF) Kevin McCormack; NEBF Trustees Lonnie R. Stevenson, David Long, Kenneth W. Cooper, and Dennis F. Quebe; North American Building Trades Unions President Sean McGarvey; AFL-CIO President Liz Shuler; International Association of Fire Fighters General President Edward A. Kelly; and National Education Association (NEA) President Rebecca S. Pringle demanding answers regarding the Biden-Harris administration’s attempts to leverage retirement assets to bolster union organizing and benefit Big Labor.

• June 14, 2024: Information obtained by the Committee from the NEA in its response to the May 22 inquiry identified CalPERS—a public pension fund—as one of the asset owners taking part in the Biden-Harris administration’s scheme to use pension assets for the benefit of organized labor.

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