Move To Permanently Repeal The Estate Tax Collapses

A competing bill pending in the Senate, S. 1677, is unacceptable to NAIFA, he says, because state-licensed insurance agents would not be among those who could provide investment advice.

In addition to the Bush administration, Winston says, H.R. 2269 is supported by virtually the entire financial services industry.

However, other proposals by the administration to reform the pension system in the wake of the Enron controversy are drawing words of caution.

For example, Bush is proposing that while employers should have the option of making matching contributions using company stock, workers must be free to choose how to invest their retirement savings.

Bush says workers should be able to sell company stock and diversify into other investment options after they have participated in a 401(k) plan for three years.

Bush is also calling for reform of so-called “blackout periods,” which are times when workers are denied the ability to sell company stock in their 401(k) plans.

Any consideration of changes to the private pension system in the wake of Enron should be done slowly, Dolan says. It is important, he says, to get to the bottom of what caused the Enron problem before changing a system which has served millions of workers very well.

Finally, more details are emerging on an optional federal chartering bill expected to be introduced soon by Rep. John LaFalce, D-N.Y., ranking Democrat on the House Financial Services Committee.

The LaFalce bill, unless it is changed before formal introduction, contains several differences from an optional federal chartering bill introduced in the Senate by Sen. Chuck Schumer, D-N.Y.

(For some arcane parliamentary reason, the Schumer bill, even though it has been introduced, does not yet have a bill number.)

For example, unlike the Schumer bill, the LaFalce bill will not call for national licensing of insurance agents and brokers who sell insurance for national companies.

All insurance agents would remain state-licensed. However, the federal insurance regulatory body, called the Office of National Insurers, would have the authority to enforce unfair trade practice rules against state licensed agents who sell for national companies.

In addition, the LaFalce bill contains what one industry attorney, who asked not to be identified, calls a “mild” Community Reinvestment Act provision.

Specifically, the LaFalce bill requires national insurers to establish and follow a written investment policy that must be reviewed and approved annually by the board of directors.

In reviewing and approving the policy, the LaFalce bill requires the board to consider the amount of investments the company has in communities where it sells insurance or has offices.

Thus, while there is no mandatory community investment standard, the LaFalce bill requires consideration of such investments by the board.

Reproduced from National Underwriter Life & Health/Financial Services Edition, February 11, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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