The House was scheduled to pass at press time legislation reforming the defined benefit pension system that includes several provisions sought–some for a number of years–by the life insurance industry.
Most notably, the industry won support in the bill for provisions that would encourage employers to offer automatic enrollment in 401(k) plans as well as allow the sale of a “combination insurance product” that permits annuities to include riders for long term care coverage.
Additionally, the legislation would clarify the rules governing the selection of an annuity by an employer, and the options an employer can offer an employee for their 401(k) program. “Presently, the rules are unclear, giving an employer pause before offering an employee an annuity,” said Jack Dolan, a spokesman for the American Council of Life Insurers.
Another provision in the bill would allow for financial services companies that manage a pension plan to provide investment advice to employees participating in that plan, with disclosures about their relationship.
“It would remove the legal hurdles that have discouraged employers from offering investment advice at the workplace,” Dolan said. “Presently, financial services firms can provide retirement plans, they can provide educational materials, but they cannot provide advice. It makes sense to allow those firms and representatives that already are helping workers plan for retirement to take the next step, which is advice giving.”