NU Online News Service, Sept. 17, 2003, 7:02 p.m. EDT — Washington
The Senate Finance Committee has approved language in a pension reform bill that would effectively eliminate many uses of corporate-owned life insurance.
The committee approved by voice vote an amendment offered by Sen. Jeff Bingaman, D-N.M., that would tax all the benefits paid on COLI policies covering employees who die more than one year after leaving employment.
This treatment would not apply to certain key employees, so long as the number of key employees does not exceed 20.
The amendment is now part of the National Employee Savings and Trust Equity Guaranty Act.
The American Council of Life Insurers, Washington, issued a statement criticizing the Finance Committee’s action.
The action, ACLI says, could ultimately deprive employers of important and necessary tools to meet future obligations and interfere with employers’ ability to provide benefits for retirees and current employees.
COLI is a well-established business tool, and the Senate Finance Committee’s action is bad policy for employers, the insurance business, workers and retirees, ACLI says.
ACLI says insurers and agents are involved in a massive grassroots effort to oppose the Bingaman amendment.