The Senate voted 95-3 today to pass and send to President Bush H.R. 4, a bill that would change the rules governing defined benefit pension plans and includes many other provisions of interest to life insurers.
In addition to changing many aspects of pension plan administration, such as the interest rate assumptions used in plan calculations, H.R. 4 would:
- Impose new standards on sellers of corporate-owned life insurance.
- Encourage insurers to sell life insurance policies and annuity contracts with long term care riders starting in 2009.
- Let companies with excess pension assets to use the assets to pay for future retiree health benefits.
- Encourage employers to enroll workers in 401(k) plans automatically.
- Ease restrictions on programs that offer personalized investment advice to participants in defined contribution retirement plans.
- Allow employees age 62 and over to collect pension distributions while continuing to work for the same employer that sponsors the pension plan.
- Create new rules for donor-advised funds.
James Klein, president of the American Benefits Council, Washington, a group that represents large employers, expressed mixed feelings about the passage of H.R. 4, the Pension Protection Act of 2006.
“The pension bill passed by the Senate tonight is a very positive step for Americans participating in defined contribution retirement plans,” Klein says.
“However, as a result of the volatile pension funding rules enacted, I believe we will witness an unprecedented number of companies closing their well-funded defined benefit pension plans to new employees.”
Life insurance company executives interviewed are welcoming passage of H.R. 4.