The Need for State Legislation to Counteract Pension De-Risking Transactions
Pension de-risking through the purchase of a group annuity contract is of paramount concern because Retirees lose all of the uniform protections intended by Congress under ERISA and their rights become subject to non-uniform state laws.
The insurance industry spends millions of dollars each year lobbying state legislators and Congress seeking to avoid any regulation in this area.
Retirees need advocates like Retirees for Justice to tell their side of the story.
In 2019, Senator Andrew Gounardes and Assemblyman Peter Abbate sponsored pension de-risking legislation in 2019 entitled “AN ACT to amend the insurance law, in relation to providing protection to certain retirees from pension de-risking transactions; and to amend the civil practice law and rules, in relation to statutorily exempt payments.” In New York State, both the Senate and Assembly must pass a bill before the Governor can sign the bill into law. The bills introduced by Senator Gounardes and Assemblyman Abbate rolled over into the 2020 legislative session and were referred to committees for review. Unfortunately, neither were called to the floor calendar for a vote.
On January 26, 2021, Senator Gounardes re-introduced this same legislation under New York Senate Bill 2885. The bill is co-sponsored by Senator Anna Kaplan. Senate Bill 2885 has been referred to the Insurance Committee for review. Assemblyman Peter Abbate introduced A6099, a “same as” bill before the New York Assembly on March 10, 2021.
New York’s proposed legislation will provide basic financial disclosures, protections of annuity benefits from creditors, and reasonable restrictions on subsequent transfers.
Ground breaking legislation was passed in Connecticut in 2015 providing protections to Retirees in pension de-risking transfers. On June 3, 2015 the Connecticut legislature unanimously passed H.B. 6772 providing creditor protections to retirees in pension de-risking transfers. On July 2, 2015 then Governor Dannel P. Malloy (D) signed Public Act 15-167 into law restoring creditor protections to Connecticut retirees impacted by pension de-risking transfers.
Without this legislation, creditors were able to garnish annuity payments designed for retirement. Follow-up legislation proposed additional protections for Retirees in pension de-risking transactions was introduced in 2016 and 2017, but despite overwhelming support from the Insurance and Real Estate Committee the bills were not brought to the floor of the House for a vote.
Retirees for Justice anticipates introducing new legislation in Connecticut in 2021.
On July 1, 2018 legislation went into effect in Virginia providing protections to retirees in pension de-risking transfers. Senate Bill SB755 introduced by Senator Glen Sturtevant (R-Midlothian) with support from Delegate Dawn Adams (D-Richmond) received unanimous support in both the Virginia House and Senate.
Virginia law now provides that (1) amounts payable to a participant under an annuity providing retirement benefits are exempt from creditors’ claims, and (2) subsequent transfers of group annuity contracts funding retirement benefits are prohibited without the prior written approval of the State Corporation Commission. The complete text of the legislation is available here: SB755 – Amending Section 38.2-3125 of the Virginia Code.
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