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August 04, 2006 at 09:00 PM
Life and health groups are celebrating the passage of some sections of H.R. 4 but hoping Congress will salvage a flexible spending account rollover provision that failed to make the final cut.
The House passed the pension bill July 28 and the Senate passed the bill Thursday. President Bush says he intends to sign the bill quickly.
The authors of the bill wrote it primarily to improve the finances of defined benefit pension plans and the Pension Benefit Guaranty Corp.
Life insurers that sell the group annuities backing many defined benefit plans have a huge stake in the welfare of the traditional pension system.
But at life groups, H.R. 4 sections that will impose new marketing rules on sellers of corporate-owned life insurance and encourage 401(k) plan sponsors to provide individualized advice seem to be getting more attention.
The COLI provision will require employers to get rank-and-file employees’ consent before insuring those employees’ lives, and it will discourage employers from applying COLI to employees who are not highly compensated employees.
The “COLI ‘best practices’ provision had the support of a broad, bipartisan majority of both Senate and House tax-writing committees,” says Frank Keating, president of the American Council of Life Insurers, Washington, a group that has spent years working on the COLI issue.
The Association for Advanced Life Underwriting, Falls Church, Va., also supported the COLI provision and other H.R. 4 provisions, and it has opposed H.R. 5970, the trifecta bill, which includes the kind of estate tax reduction measure that the AALU has opposed.
Shortly before the Senate passed H.R. 4, supporters of H.R. 5970 tried and failed to get 60 votes to protect H.R. 5970 from a filibuster. The vote on the cloture motion kept the bill from coming up for a vote in the Senate.
