Federal pension simplification legislation cleared a conference committee late last night largely intact. But insurance companies and the Labor Department lost out in their bid to completely gut the impact of the Supreme Court's 1993 decision in John Hancock vs. Harris Trust and Savings Bank.
The conference committee watered down the Senate provision exempting insurance companies from upholding the tenets of ERISA for pension plan assets held in their general accounts. The court had ruled in 1993 that insurance companies would have to abide by federal pension law for a portion of pension plan assets held in their general accounts or central investment pools.
The compromise provision exempts insurance companies from lawsuits filed after Nov. 7, 1995, except for criminal violations and breaches of fiduciary duty that also violate state or federal criminal law. But insurance companies will have to comply with new Labor Department regulations requiring them to describe the manner in which they allocate income and investment expenses for all existing investment contracts before Dec. 31, 1998.