Raised Bill No. 5445
February Session, 2016
LCO No. 1772
Referred to Committee on INSURANCE AND REAL ESTATE
AN ACT CONCERNING THE PURCHASE OF AN ANNUITY TO FUND PENSION BENEFITS.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. (NEW) (Effective October 1, 2016) (a) As used in this subsection, "employer" means any person engaged in a business in this state and employing two or more employees, but does not include the state or a municipality or other political subdivision of the state, and "pension plan" has the same meaning as provided in 29 USC 1002(2)(A), as amended from time to time.
(b) On and after October 1, 2016, any insurance company that issues an allocated or unallocated group annuity contract described in subparagraph (F) of subdivision (1) of subsection (a) of section 52-321a of the general statutes to an employer in this state or a pension plan providing retirement benefits to employees or retirees in this state shall provide, not later than thirty days before the effective date of such annuity contract, the following information in writing to each employee and retiree who is an intended participant of or beneficiary under such annuity contract:
(1) A description of the differences in the protections afforded by such annuity contract and the Employee Retirement Income Security Act of 1974 or the federal Pension Benefit Guaranty Corporation, and a list of applicable state laws governing annuity payments;
(2) A statement of the amount of, scope of and conditions precedent for coverage under the Connecticut Life and Health Insurance Guaranty Association pursuant to chapter 704a of the general statutes or any subsequent corresponding guaranty association that provides coverage of annuity contracts to annuitants and beneficiaries residing in the state and any supplemental coverage provided under state law in the event of the insolvency of the insurance company;
(3) A statement of the extent to which annuity payments may become subject to claims of creditors of the insurance company or to avoidance actions taken by bankruptcy trustees;
(4) A statement of any change in the tax treatment of a participant of or beneficiary under such annuity contract;
(5) Detailed information about the annuity contract, including a schedule of all costs and expenses to be paid in connection with the issuance of such contract; and
(6) A copy of any fairness opinions or solvency analysis performed by the insurance company in connection with the selection of the annuity.
(c) For each such annuity contract issued on or after October 1, 2016, the insurance company shall provide annually the following information in writing to each employee and retiree who is a participant of or beneficiary under such annuity contract:
(1) The funding level of all assets relative to the expected liabilities under the assumed pension benefit schedules;
(2) An investment performance summary by asset class;
(3) An investment performance detail report by asset class;
(4) A list of all expenses associated with such annuity contract, including payments made to beneficiaries and administrative expenses;
(5) Changes, if any, in actuarial assumptions; and
(6) A list of any public documents related to such annuity contract that have been filed with the Insurance Department and instructions for obtaining any such documents.
(d) No such annuity contract shall be subsequently transferred unless such transfer is made to an entity that maintains a rating equivalent to an A or better from two or more nationally recognized rating agencies.
(e) The Insurance Commissioner may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to implement the provisions of this section, including the imposition of any penalties, fines or assessments for a violation of any provision of this section.
This act shall take effect as follows and shall amend the following sections:
October 1, 2016
Statement of Purpose:
To require an insurance company to provide certain disclosures to employees and retirees of an employer when such company issues a group annuity contract to provide retirement benefits to such employees and retirees, and limit subsequent transfers of such annuity contract.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]