Senator Chris Murphy Introduces the Pension Risk Transfer Accountability Act of 2021
On March 3, 2022, Senator Chris Murphy (D-Conn) introduced the Pension Risk Transfer Accountability Act of 2021, legislation designed to make defined benefit pensions plans more secure by directing the U.S. Department of Labor to review its guidance on pension risk transfers (PRT) and determine whether additional guidance is necessary to protect pensioners. The guidance has not been updated since it was first issued in 1995.
PRT is the process in which defined benefit plan sponsors transfer pension liabilities to insurance companies, replacing pension benefits with annuity benefits, allowing assets to move from traditional, secure investments to potentially riskier ones that are more sensitive to downturns in the market. As a result of these transfers, beneficiaries lose their federal Employee Retirement Income Security Act (ERISA) and Pension Benefit Guaranty Corporation (PBGC) protections.
The Pension Risk Transfer Accountability Act of 2021 would direct the Secretary of Labor to review its longstanding guidance on the fiduciary standards under ERISA for plans when selecting an annuity provider to distribute plan benefits and to determine whether amendments to it are warranted; and report to Congress on the findings of such review, including an assessment of any risk to participants. In a recent press release Senator Murphy stated:
“Planning for retirement is stressful, and no American should have to worry about greedy corporations playing games with their pension savings. This bill would make sure the Department of Labor takes a serious look into updating guidance to help ensure Connecticut families with pensions have peace of mind that their savings are secure.”
Connecticut State Treasurer and President of the National Association of State Treasurers Shawn Wooden applauded Murphy’s efforts, stating “Workers count on their pension benefits to retire with security and shouldn’t have to worry about offshore maneuvers that get in the way of proper oversight. I commend Senator Murphy for introducing legislation that calls for a close review of the regulations governing pension risk transfers, and the protections that American workers have come to depend on.” State Treasurer Shawn Wooden is the sole trustee of the state’s $47 billion pension funds.