COLI Provisions Added To Senate Pension Legislation Language codifies ground rules for sale of COLI
By Arthur D. Postal
Legislation was introduced last week by the bipartisan leadership of the Senate Financial Services Committee that will codify ground rules for the sale of corporate-owned life insurance.
The COLI provisions were added to legislation designed to shore up the nations troubled private pension plan system.
The legislation also contains an investment advice provision supported by Sen. Jeff Bingaman, D-N.M., that is different from the one the industry desires.
Jack Dolan, an American Council of Life Insurers spokesman, said life insurers are cool to Bingamans proposal because they believe it would deprive agents and other company representatives from providing advice at the worksite.
Instead, Dolan said the trade group and other insurers will push alternative investment advice legislation that contains no restrictions on advice giving by representatives of insurers or other financial institutions that are providing services to a pension plan.
“We believe the best investment advice bill would be one allowing companies that already are providing pension plans and educational materials to employees to also be allowed to provide advice.” Dolan said. “It is abundantly clear that employees want and need assistance in retirement planning, and we are hoping to provide it.”
Dolan added that panel staffers indicated they are open to changes in specific provisions, if appropriate.
Another provision that would facilitate growth of plan assets, many of which are administered by insurers, would allow participants in 401(k) or similar plans in troubled companies to contribute “catch-up” payments to an IRA if the troubled employer matches the contribution. The bill also contains easier portability rules.
The legislation, called the National Employee Savings and Trust Equity Guarantee (NESTEG) Act, was introduced by Sens. Charles Grassley, R-Iowa, and Max Baucus, D-Mont., chairman and ranking minority member, respectively, of the panel, and is similar to a bill introduced last year.