Private Pensions: Millions of Workers Lose Federal Benefit Protection at Retirement
HRD-91-79
Published: Apr 25, 1991. Publicly Released: Apr 25, 1991.
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Highlights
Pursuant to a congressional request, GAO reviewed the protection available to retirees receiving benefits from insurance companies in case of insurance company failure, focusing on: (1) how many retirees received their benefits from insurance companies; (2) whether federal and state guarantees were available for those annuitants; and (3) recent financial difficulties in the insurance industry.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| ERISA was passed to protect the interests of participants in pensions plans. Because 3 million former participants have lost this protection, Congress may wish to consider approaches for extending federal protections to retirees receiving insurance annuities. In extending those protections, Congress will need to consider what additional funding, administrative, and regulatory provisions would be necessary. At a minimum, Congress should consider requiring pension plans that purchase insurance annuities to inform their current workers and past retirees that these annuities are not federally guaranteed. | The Pension Benefit Guaranty Corporation (PBGC) issued an interim regulation, effective December 16, 1991. The regulation requires employers to inform plan participants that PBGC guarantees are extinguished upon distribution of plan assets in full satisfaction of a participant's liabilities. |
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Topics
Bank failuresFinancial managementRetireesInsurance companiesInsurance regulationInvestment planningLife insurancePensionsRetirement benefitsState law