Congressional negotiators were moving rapidly at press time to finalize pension benefit reform legislation language which would allow the insurance industry to offer a host of new products in the defined contribution area–including providing investment advice to plan participants.
While decisions were tentative and details scanty, underwriter and agent industry officials were privately prepared to call the legislation a strong positive for the industry.
Rep. John Boehner, R-Ohio, House majority leader and a negotiator on the pension bill, said July 20 that he hopes the bill can be on the desk of President Bush this week.
Other members of Congress said a more likely scenario is for the House to vote on the bill before it leaves for a month-long summer recess July 27, and for the Senate to finish work on the bill before it leaves on Aug. 4.
David Stertzer, CEO of the Association for Advanced Life Underwriting, Falls Church, Va., agreed, saying on July 20 that there appears to be "positive developments" in the efforts to complete the pension legislation, perhaps as soon as the beginning of August.
Officials at the National Association of Insurance and Financial Advisors, Falls Church, Va., voiced concern about the value to plan participants of the investment advice compromise being drafted by bill negotiators. But, in general, lobbyists said they expect all of the proposals sought by the industry to be included "in some form" in the final package, according to a consensus of the American Council of Life Insurers, Washington; AALU and NAIFA lobbyists.
These included language codifying the tax treatment of corporate-owned life insurance and establishing a best practices system for the product's sale; extending the pension and retirement benefit enhancements contained in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); automatic enrollment in 401(k) plans; a provision allowing a long term care rider to annuities; and rollover of flexible spending account balances.
In another victory for the industry, negotiators apparently have decided not to include a provision in the pension reform bill or allied tax legislation that would have severely limited the sale of investor-owned life insurance (IOLI), or, as it is sometimes called, stranger-owned life insurance.
The reason the industry did not want the provision is that it was considered too broad and would go beyond just limiting what is considered inappropriate transactions, according to industry accounts.
That issue will be on the agenda for tax writers next year, lobbyists and staffers said.
But whether the cup could be declared half full or half empty depends on the success or failure of another effort by the Senate Republican leadership to dump an expensive estate tax reform proposal into the bill.
At press time, Sen. William Frist, R-Tenn., Senate majority leader, was trying to persuade bill negotiators to include in the bill language that would exempt the first $5 million of an individual's estate and $10 million of a couple's from taxation.
