Insurers and ERISA
Your July 21 editorial, "Reluctant fiduciary," shows that you still fail to recognize the benefits of the ERISA Clarification Act nearly one year after its passage.
Rather than undermining the Supreme Court's 1993 ruling in John Hancock vs. Harris Trust, as your editorial alleges, the ERISA Clarification Act assures that the court's decision is implemented in a way that fully protects the rights of plan participants and beneficiaries. At the same time, it prevents the disruption to a major portion of the pension marketplace which the Supreme Court recognized its decision would have caused. That is why the court invited Congress to address the issues raised by its ruling.
What's particularly galling about the editorial is the disingenuous claim that there were no public hearings on the legislation. It's true no congressional meeting was officially billed as a hearing on "The ERISA Clarification Act."
But on June 26, 1996, Rep. Harris Fawell (R-Ill.), chairman of the House Subcommittee on Employer-Employee Relations, held a hearing, "Issues in Pension Reform." Most of it was devoted to the legislation. Mr. Fawell's subcommittee received testimony from many of the interested parties, including a representative of Unisys, which was the pension plan involved in the Harris Trust case. Several subcommittee members asked questions and considerable discussion and debate took place.
The legislation itself was introduced by two highly respected members of Congress: former Sen. Nancy Kassebaum (R-Kan.) and Rep. Marge Roukema, (R-N.J.). The legislation was supported by a large, bipartisan group of both representatives and senators and the Clinton administration.
Rather than "intervening precipitously in amending ERISA," Congress passed legislation that balanced the interests of all parties. The legislation requires the Department of Labor to issue regulations that fully protect the rights and interests of plan participants and beneficiaries. The legislation also appropriately protects insurers from lawsuits brought for past actions taken in good faith reliance on government rules that were in place since the enactment of ERISA. Neither the legislation nor the regulations that will be issued by the Department of Labor will prevent a plan from bringing a lawsuit alleging breach of fiduciary duty for actions taken by an insurer in the future.
The legislation deserves praise, not condemnation. Congress developed a reasoned, balanced and appropriate response to a Supreme Court decision that could have caused major disruption in the marketplace to the detriment of not only the life insurance industry, but plan participants and beneficiaries as well. It is unfortunate that Pensions & Investments did not do a better job of ascertaining the facts.
Stephen W. Kraus
Chief Counsel, Pensions
American Council of Life Insurance
CHANGE IN CLIENT CONTACT
The client contact name of Delaware Management Co. as published in Pensions & Investments is listed as Winthrop S. Jessup. This information is outdated and should be changed to list Barclay L. Douglas as the current client contact for Delaware in future issues.
Matthew S. Garrison
Manager, Institutional Communications
Delaware Investment Advisers