Retirees vs Insurance Industry at Statehouse Standoff
In March ProtectSeniors.Org leaders testified in Hartford, Connecticut before the House Insurance and Real Estate Committee about necessary legislation to add protections for de-risked retirees. The bill, HB 5445, “An Act Concerning the Purchase of an Annuity to Fund Pension Benefits,” is being opposed by that state’s insurance industry.
The new bill would requires mandatory annual disclosures to retirees and prevent healthy insurance companies from transferring retiree benefits to a financially troubled companies.
In 2015 ProtectSeniors.Org helped achieve passage of Public Law No. 15-167 granting creditor protections to retirees in pension de-risking transfers.
ProtectSeniors.Org member Ed Chromczak testified, “I am here to express my concerns about my future because of actions taken not only by the corporation that I worked for during 35 years of my life, but, of the potential actions that could be taken by the company now controlling what was my pension and is now an annuity. As we all learned during the financial crisis, no company is too big to fail and these insurance companies are no exception. I did not work a day in my life for the insurance company, and now I have no idea how secure my monthly payments will be in the event the insurance company defaults or transfers this contract to another company.”
ProtectSeniors.Org Special Counsel Edward Stone told the panel, “Retirees have a right to know what is happening with their assets and parties to de-risking transactions should be required to inform retirees of any material developments with respect to their future annuity payments on a regular basis. Providing annual disclosures and limiting future transfers to a well-capitalized and highly rated annuity provider will help to ensure that retirees will not suffer through an insurance insolvency and its aftermath.”
American Council of Life Insurers (ACLI) Vice President, Chief Counsel & Deputy for Connecticut State Relations, Kate Kiernan said the industry opposed legislation that could help alleviate retirees’ fears, saying “The proposed legislation will detrimentally restrict the transfer of pension plan risks and raise the costs of these beneficial transactions, potentially harming Connecticut consumers.”
Eric George, President of the Insurance Association of Connecticut said, “HB5445…will create confusion, as well as potentially unsupported and unjustified concerns, about the financial integrity of annuity products. Plan Sponsors, plan fiduciaries and insurance carriers have strived to ensure that workers have all the information they need to understand their benefits, entitlements and rights in connection with annuitization transactions.”
Association of BellTel Retirees Chairman Jack Cohen testified, “I was absolutely confident that these protected benefits would be the pillars holding up the foundation of my retirement years not only at the time I retired but also in subsequent retirement years, in which I now find myself, at age 72.”
He continued, “I was one of the 41,000 managers who had this pension that had been protected by the federal ERISA law migrated to a Prudential Group Annuity contract, which completely circumvented those federal protections. As a group annuitant, I can no longer learn if my pension asset is worth anything from year-to-year. I receive no disclosure. I have to be concerned that my pension asset might be cut into pieces – sold off, and receive the same fate as the notorious Collateralized Mortgage Obligations during the financial crisis.”
At deadline the joint legislative committee voted 17-2 in our favor. Stay tuned!
More information about the new legislation can be found at: