ACLI Tries To Put Annuities On Labor Default Investment List

The insurance industry, with the help of a letter from 14 members of Congress last December, already has persuaded the agency to delay issuing a final rule. The PPA called for the final rule to be issued in February.

The Labor Department “got it right the first time,” says F. Gregory Ahern, a spokesman for the Investment Company Institute, Washington, a group that represents the fund companies.

“It would be wrong to weaken that regulation by adding other products – including money-market funds and other stable-value products – that don’t meet the law’s objectives,” Ahern says.

The representative for the Labor Department said Monday it is unclear when a final rule will be published, and there is some belief a final rule may not be published for another month or more.

OMB is the gate keeper for the administration and must approve all regulations imposed by federal departments and agencies. Among the criteria OMB uses in approving a new regulation is whether the regulation’s costs are greater than its benefits.

The ACLI says OMB should reject Labor Department default provisions excluding annuities if they are in a final rule because the regulatory analysis underlying the default investment regulation is “incomplete,” and the cost-benefit analysis on which the agency based its regulatory approach is “flawed.”

“We believe that the EBSA has substantially overstated the benefits of its regulation and failed to consider several significant costs in the form of disruption to financial markets, the retirements subject to the regulation, and the American workers that participate in those plans,” Cammack writes.