As more companies seek to reduce their pension obligations by transferring their obligations to insurance companies via annuity buy-outs, regulation of these risk transfers, including disclosures and protections for retirees will be paramount. Retirees often refer to annuity buy-outs as “pension stripping” transactions because the offloading of pension obligations to an insurance company or other annuity provider causes retirees to lose all of the comprehensive and uniform protections intended by Congress under ERISA, including the financial safety net offered by the PBGC.
The Pension De-Risking Model Act, sponsored by Rep. George Keiser (ND), was presented for the first time at NCOIL’s Annual Meeting in November of 2013. The Pension De-Risking Model Act will be more fully explored at NCOIL’s Spring Meeting scheduled for March 6-9, 2014 in Savannah. The Pension De-Risking Model Act provides for (1) mandatory disclosures to retirees whose benefits are transferred; (2) creditor protections for retirees; (3) opt-out options for retirees; and (4) supplemental protections in the form of third-party guarantees or reinsurance.
Edward Stone presented information on the importance of protecting retirees in pension de-risking transactions at the November NCOIL meeting and can provide assistance to those concerned about the impact of pension de-risking and pension stripping transfers on retirees.