WASHINGTON – In two amicus briefs filed over the past two weeks, the American Council of Life Insurers (ACLI) outlined the robust levels of oversight, regulation and monitoring that ensures participants are protected when an employer enters into pension risk transfer. The briefs were submitted in connection with two lawsuits against employers who transferred their pension plans to life insurance companies.
“Plaintiffs in both cases make misleading allegations about the risk to participants associated with pension risk transfers. Our briefs detail the extensive and consistent protections in place after a plan sponsor decides to transfer risk in providing ongoing pension benefits to participants,” said ACLI President and CEO David Chavern. “When companies move their pensions to insurers, they are ensuring that their retirees receive the same guaranteed lifetime income they were promised. Life insurers are the experts at managing long-term risk, which is why companies are increasingly turning to them to fulfill pension plan commitments.”
The briefs highlight the stringent nature of state regulatory oversight that ensures life insurers are able to meet their lifetime obligations to retirees. Since the implementation of enhanced reserving and other solvency rules in the mid-1990s, no retirees whose pensions were transferred to an insurance company annuity has seen a reduction in their promised benefit due to an insurer insolvency.
Pension risk transfers also remove a significant financial and administrative burden for companies, which enables them to deploy more of their resources toward their regular business operations. “Unburdened by their pension obligations, employers are in a much better financial position to innovate, grow and create new jobs,” Chavern said.
The American Council of Life Insurers is the leading trade association driving public policy and advocacy on behalf of the life insurance industry. 90 million American families rely on the life insurance industry for financial protection and retirement security. ACLI’s member companies are dedicated to protecting consumers’ financial wellbeing through life insurance, annuities, retirement plans, long-term care insurance, disability income insurance, reinsurance, and dental, vision and other supplemental benefits. ACLI’s 275 member companies represent 93 percent of industry assets in the United States.
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