First, let us be thankful for small mercies. The House has been enjoying its summer recess since late July and therefore will not be able to do any formal mischief until it returns early in September.
Unless I’m mistaken, the Senate is also already basking in its August recess, with plans for that chamber to resume its weighty deliberations on Sept. 5. I’m sure the senators need a good long rest after the mad scramble that characterized their sessions earlier this month.
Knowing the machinations that went on regarding cutting the estate tax, increasing the minimum wage and extending some popular tax breaks, I think Congress’ guiding rule of thumb should be the same as the one that doctors abide by–that is, first, do no harm. Unfortunately, this seems to be the last consideration much of the time in what has become a perpetual game of political one-upmanship on Capitol Hill.
Keep your seatbelts fastened because this only is going to get worse as we approach the midterm elections and the posturing grows more intense as both parties seek maximum political advantage.
Yet, in spite of these odds, every once in a while legislation makes it through the process that actually achieves something positive. The Pension Protection Act of 2006, at this writing still to be signed by President Bush, looks to be one such piece of legislation.
Of course, this bill has seemed to be around longer than George Burns, but that’s only because it kept getting stuffed with more and more goodies along the way.
On many counts, the life insurance business does pretty well in this bill and got a lot of things that were on its wish list.
Given that at one point the entire bill looked like it was going to be sacrificed on the altar of estate tax reduction, everyone is breathing a sign of relief.
Lopping the estate tax significantly is still alive, however, because Senate Majority Leader Bill Frist won’t–or can’t–let it go.
Even though such reductions were rejected on a straight up-and-down vote and then voted down on one that wasn’t so straight, Frist is committed to playing high-stakes poker using other pieces of much-desired legislation as hostaged chips to get estate tax cuts. We’ll see how it plays out.
Getting back to what the industry likes in the bill, you could hear all manner of cooing from trade groups and individual companies.
Rejoicing a bit is in order, however, since they’ve been waiting so long.
Everyone in the industry seems to be happy about COLI best practices that are embedded in the bill as well as agents being allowed, with restrictions, to offer investment advice to employees regarding their 401(k) plans. Similarly, a provision allowing a long term care rider to be attached to annuities has been greeted with a lot of enthusiasm.
Only the fact that a rollover provision for flexible spending accounts was dropped from the final bill was a cause for disappointment.
Not that the industry is going to give up here either. Expect the push for FSA rollovers to continue next year.
Add up what the industry did get, however, and suddenly there are a lot more arrows in its quiver. Retirement planning and distribution is the name of the game going forward for the industry and many of the bill’s provisions feed nicely into that.
Despite the fact that so much of what Congress tried to do this year got mucked up, the pension bill was a bright spot. And for that not-so-small mercy, we can be thankful.