The American Council of Life Insurers is asking the U.S. Department of Labor to make guaranteed insurance products eligible for use in Pension Protection Act automatic-enrollment programs.
The idea that the Labor Department would exclude group annuities, stable value funds and other guaranteed insurance products from its proposed list of “qualified default investment alternatives,” or QDIAs, is “simply unfathomable” to the ACLI, Ann Cammack, an ACLI senior vice president, writes in a comment letter on behalf of the ACLI.
“If Congress had deemed guaranteed products unworthy of QDIA status, Congress would have explicitly said so,” Cammack writes.
Cammack is asking the Labor Department to schedule a public hearing on the proposed regulations to address its members’ concerns about the way the department appears to be implementing the PPA.
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The PPA, signed in August, includes a provision encouraging employers to enroll employees in retirement savings plans automatically. At employers with automatic enrollment programs, employees will have to take active steps to get out of the plans.
The Labor Department recently proposed PPA implementation regulations that provide a list of QDIAs, or product classes suitable as default investments for employees who have been enrolled in retirement plans automatically, without indicating any investment preferences.
Many plans already use guaranteed insurance products as default investments, and the Labor Department has endorsed use of guaranteed insurance products as default investments on many other occasions, Cammack writes.