The Clinton administration is urging Congress to pass legislation that would clean up the "regulatory quagmire" caused by a 1993 Supreme Court decision on pension plan assets held in insurance companies' general accounts, Assistant Secretary of Labor E. Olena Berg testified in recent congressional hearings.
But some current and former lawmakers cited concerns expressed by an organization of corporate plan sponsors, as well as labor unions and the American Association of Retired Persons as reasons to deliberate further.
Rep. Harris Fawell, R-Ill., chairman of the House Subcommittee on Employer-Employee Relations, and former Rep. John Erlenborn, R-Ill., and one of the authors of the Employee Retirement Income Security Act, voiced concerns the legislation would give the insurance industry a break from the fiduciary standards in federal law that apply to all other investment advisers.
And Rep. William Clay, D-Mo., the seniormost Democrat on the House Economic and Educational Opportunities Committee, said the bill would "strip away vital protections from millions of pension plan participants and beneficiaries. It would not only do so for the future, but also retroactively to 1975. And all to benefit one special interest -the life industry."
Meanwhile, the Senate Labor and Human Resources Committee passed "The ERISA Clarification Act of 1995," a companion to the House legislation. The bill, which passed 14-2, would require the Department of Labor to issue guidance by the end of this year on how insurance companies should handle pension plan assets held in their central investment pools.