Senators have included provisions that could affect life insurers in a bill better known for sections dealing with federal retirement benefit guarantee insurance.[@@]
You may not be able to read S. 219 on the Web right now, because, at press time, the Library of Congress bill posting system had not yet received the text from the Government Printing Office, but the core is a section that is supposed to improve the financial stability of the Pension Benefit Guaranty Corp.
The PBGC, the organization that backs defined benefit pension plans, has seen its deficit increase to $23 billion, from $11 billion, in just 1 year.
Other sections of the bill could:
- Codify ground rules for the sale of corporate-owned life insurance.
- Create a retirement plan investment advice provision that might prevent life insurance agents and company representatives from giving advice at the worksite.
- Loosen retirement plan portability rules.
- Let certain 401(k) plan members contribute “catch-up” payments to individual retirement accounts, if the plan members were employed by a “a currently bankrupt employer, and the employer is currently under indictment or subject to conviction.”
- Let plan sponsors avoid liability for the investment advice that a qualified investment advisor gives to retirement plan participants.
- Allow employers to deduct up to $1,000 in retirement planning advice fees per year from employees’ taxable income.
The new bill, which would create the National Employee Savings and Trust Equity Guarantee Act, is similar to the NESTEG bill that died in the previous Congress. The new NESTEG bill was introduced by Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, and Sen. Max Baucus, D-Mont., the committee’s ranking minority member.
The COLI provision uses the same language that the Senate Finance Committee approved in February 2004.