Life insurers are asking the Bush administration to step in and delay implementation if a final U.S. Department of Labor rule rejects the use of annuities and guaranteed investment contracts as default investments in 401(k) plans.
The contingency plan came to light in a letter the American Council of Life Insurers, Washington, sent on behalf of its 373 members to the Office of Management and Budget.
“The American Council of Life Insurers and its members have significant concerns regarding the U.S. Department of Labor, Employee Benefits Security Administration’s proposed regulation addressing default investment alternatives under participant-directed” 401(k) plans, Anne Cammack, an ACLI senior vice president, writes in the letter.
If the final rule “materially follows” the proposed regulation with respect to qualified default investment alternatives, OMB should “return the default investment regulation to EBSA for further consideration of the matters discussed below,” Cammack writes.
In addition, Cammack asks OMB officials to meet with the ACLI to “discuss our concerns with you and members of your staff at your earliest convenience.”
The current Labor Department proposed rule, which implements a provision of the Pension Protection Act of 2006, includes mutual fund products such as lifecycle funds on the approved list of default investments.
Retirement plan administrators would use the default options to invest the funds of plan participants who do not take active steps to allocate their own assets.