WASHINGTON–U.S. Senator Chris Murphy (D-Conn.), a member of the U.S. Senate Health, Education, Labor, and Pensions Committee, on Thursday introduced the Pension Risk Transfer Accountability Act of 2021, legislation to help make defined benefit pension plans more secure by directing the U.S. Department of Labor to review its guidance on pension risk transfers (PRT) and determine whether additional guidance is necessary to protect pensioners. The guidance has not been updated since it was first issued in 1995.

PRT is the process in which private equity firms buy out pension liabilities and transfer them into annuities, allowing assets to move from traditional, secure investments to potentially riskier ones that are more sensitive to downturns in the market. Moreover, as a result of these transfers, beneficiaries lose their federal Employee Retirement Income Security Act (ERISA) and Pension Benefit Guaranty Corporation (PBGC) protections.

“Planning for retirement is stressful, and no American should have to worry about greedy corporations playing games with their pension savings. This bill would make sure the Department of Labor takes a serious look into updating guidance to help ensure Connecticut families with pensions have peace of mind that their savings are secure,” said Murphy.

“Workers count on their pension benefits to retire with security and shouldn’t have to worry about offshore maneuvers that get in the way of proper oversight. I commend Senator Murphy for introducing legislation that calls for a close review of the regulations governing pension risk transfers, and the protections that American workers have come to depend on,” said Connecticut State Treasurer and President of the National Association of State Treasurers Shawn Wooden, sole trustee of the state’s $47 billion pension funds.

The Pension Risk Transfer Accountability Act of 2021 would:

  • Direct the Secretary of Labor to review its longstanding guidance on the fiduciary standards under ERISA for plans when selecting an annuity provider to distribute plan benefits and to determine whether amendments to it are warranted; and
  • Report to Congress on the findings of such review, including an assessment of any risk to participants.

At a HELP hearing last October for the nomination of Lisa Gomez for Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA), Murphy highlighted the importance of the EBSA looking into PRTs and private-equity backed insurance companies.