Investor Protection

Testimony of CFA Director of Investor Protection to DOL’s Council on Employee Welfare and Pension Benefit Plans

Today, CFA’s Director of Investor Protection Micah Hauptman testified before the Department of Labor’s Employee Welfare and Pension Benefit Plans (ERISA) advisory committee. Hauptman stated that in recent years many of the largest companies in the U.S. have transferred their pension obligations to insurance companies in the form of annuities, thus shifting risks onto insurance companies that could hurt workers and retirees. Hauptman stated:

  1. Recent changes in insurance market practices have increased risks for insurance companies and the workers and retirees whose pensions are transferred to them.
  2. State insurance guarantees are unlikely to provide the same benefits as Pension Benefit Guaranty Corporation (PBGC) guarantees.
  3. The Department must ensure that plan fiduciaries that transfer pensions to insurance companies adhere to their fiduciary duties to ensure that any pension risk transfer arrangements are in the sole interest of plan participants and beneficiaries, and do not leave workers or retirees worse off than they would be if they stayed in the defined benefit pension.

Hauptman called on the Department to remember that workers and retirees have earned their pensions and depend on them to get through retirement. DOL must ensure that those benefits and the protections afforded to workers and retirees are not compromised.