[Congressional Record Volume 141, Number 175 (Tuesday, November 7, 1995)]
[Senate]
[Page S16756]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. KASSEBAUM (for herself, Mr. Dodd, and Mr. Jeffords):
  S. 1400. A bill to require the Secretary of Labor to issue guidance 
as to the application of the Employee Retirement Income Security Act of 
1974 to insurance company general accounts; to the Committee on Labor 
and Human Resources.


                  THE ERISA CLARIFICATION ACT OF 1995

 Mrs. KASSEBAUM. Mr. President, I rise today along with Senator 
Dodd and Senator Jeffords, to introduce the ERISA Clarification Act of 
1995.
  This legislation is designed to protect pension plan participants and 
beneficiaries by removing the threat of retroactive liability based on 
the way life insurance companies have historically organized and 
managed pension assets. Importantly, the legislation would not affect 
any ongoing civil action.
  For nearly 20 years, the insurance industry relied on an interpretive 
bulletin issued by the Department of Labor, as well as an Internal 
Revenue Service ruling, which stated that assets held in an insurance 
company's general account were not considered plan assets under the 
Employee Retirement Income Security Act [ERISA]. In December 1993, 
however, the Supreme Court ruled in John Hancock versus Harris Trust 
that this long-standing practice of including pension assets as part of 
a general account could violate certain provisions of ERISA. The Court 
recognized that its decision created the possibility of serious 
disruptions in the way pension assets were managed. As such, it 
commented that problems arising from the decision should be addressed 
legislatively or administratively.
  The Department of Labor is working closely with all parties to 
develop rules, consistent with Harris Trust, for dealing with 
prospective insurance company activities. However, without additional 
legislative authority, the Department of Labor may be unable to grant 
protection for retroactive activities which might expose insurance 
companies to significant liability and threaten the security of pension 
assets.
  Mr. President, in the nearly 20 years before the Supreme Court's 
decision in Harris Trust--and in the 2 years since that decision--there 
has been little evidence that plan participants have been harmed by the 
insurance industry's long-standing practice of managing benefits, or 
that the insurance industry is especially prone to the problems of 
asset mismanagement that gave rise to ERISA. In fact, there were no 
enforcement proceedings initiated by the Department of Labor against 
insurers resulting from the mismanagement of pension assets prior to 
the Harris Trust decision.
  I believe, however, that our failure to address this issue could 
threaten the safety and security of pension assets by exposing the 
insurance industry to millions of dollars of retroactive liability. 
Therefore, I believe we should consider, and enact, this important 
legislation as quickly as possible. I look forward to working with my 
cosponsors, and with other Members of this body, to do so.

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