Massachusetts 2025-2026 Regular Session

Massachusetts House Bill H1184 Compare Versions

Only one version of the bill is available at this time.

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2	2	HOUSE DOCKET, NO. 2905 FILED ON: 1/16/2025
3	3	HOUSE . . . . . . . . . . . . . . . No. 1184
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Ryan M. Hamilton
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act to amend the insurance law, in relation to providing protection to certain retirees from
13	13	pension de-risking transactions.
14	14	_______________
15	15	PETITION OF:
16	16	NAME:DISTRICT/ADDRESS :DATE ADDED:Ryan M. Hamilton15th Essex1/16/2025 1 of 6
17	17	HOUSE DOCKET, NO. 2905 FILED ON: 1/16/2025
18	18	HOUSE . . . . . . . . . . . . . . . No. 1184
19	19	By Representative Hamilton of Methuen, a petition (accompanied by bill, House, No. 1184) of
20	20	Ryan M. Hamilton for legislation to provide protection for certain pension plans. Financial
21	21	Services.
22	22	The Commonwealth of Massachusetts
23	23	_______________
24	24	In the One Hundred and Ninety-Fourth General Court
25	25	(2025-2026)
26	26	_______________
27	27	An Act to amend the insurance law, in relation to providing protection to certain retirees from
28	28	pension de-risking transactions.
29	29	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
30	30	of the same, as follows:
31	31	1 Section 1. Short Title
32	32	2 This act shall be known and may be cited as the Pension De-Risking Act.
33	33	3 Section 2. Statement of Purpose
34	34	4 To provide protections to retirees whose pension benefits are transferred from a pension
35	35	5plan protected under the Employee Retirement Income Security Act (“ERISA”) to a substitute
36	36	6pension benefit provider such as an insurance company licensed and regulated under state law.
37	37	7 Section 3. Declaration of Legislative Findings and Intent
38	38	8 Retiree benefits under pension plans that were previously protected under ERISA are
39	39	9increasingly being transferred to insurance companies in pension de-risking or “pension
40	40	10stripping” transactions involving the purchase of group annuity contracts governed under state 2 of 6
41	41	11law. State laws should be enacted or amended to provide reasonably equivalent protection to
42	42	12retirees in de-risking transactions who lose benefits Congress intended under ERISA.
43	43	13 Section 4. Applicability
44	44	14 This Act shall apply to any insurance company or other benefit provider that issues a
45	45	15group annuity contract or other retirement funding vehicle governed by state law to replace
46	46	16pension plan benefits under a retirement plan previously governed by ERISA.
47	47	17 Section 5. Regulatory Approval
48	48	18 All pension de-risking or pension stripping transactions that divest retirees of ERISA
49	49	19protections shall be approved by the Commissioner prior to implementation.
50	50	20 Section 6. Third-Party Guaranty or Reinsurance
51	51	21 All de-risking transactions shall include supplemental protections in the form of a third
52	52	22party guarantee or reinsurance contract designed to equal the scope and breadth of the coverage
53	53	23provided by the Pension Benefit Guaranty Corporation (“PBGC”) under ERISA. Such third party
54	54	24guaranty or reinsurance arrangement shall cover disruptions or shortfalls in payments due to
55	55	25retirees in the event of an annuity provider insolvency up to limits that mirror PBGC coverage or
56	56	26as otherwise established by the Commissioner. Third party guaranty or reinsurance coverage
57	57	27amounts shall only payable when there is an actual reduction or delay in scheduled benefit
58	58	28payments to retirees. Third party guaranty arrangements and reinsurance contracts shall be
59	59	29designed to supplement and/or enhance state guaranty association contributions so as to avoid
60	60	30disruption and/or reduction of benefit payments to retirees whenever possible. Third party
61	61	31guaranty providers and reinsurers may assert statutory subrogation rights against insolvent 3 of 6
62	62	32insurers and guaranty associations only after payment in full is made to retirees protected
63	63	33hereunder.
64	64	34 Section 7. Mandatory Disclosures
65	65	35 That the insurance laws of Massachusetts under Chapter 175 be amended to:
66	66	36 A. Require mandatory disclosures by the benefit provider to all retirees whose benefits
67	67	37are transferred in a pension de-risking or annuitization transaction to an insurance company or
68	68	38other benefit provider regulated under state law with the following information prior to the
69	69	39effective date of the transfer:
70	70	40 1. A detailed disclosure statement that contains information regarding the loss of federal
71	71	41ERISA protections, including PBGC protection and the applicable state laws that will govern
72	72	42their future annuity payments;
73	73	43 2. The amount, scope and conditions precedent for state guaranty association coverage or
74	74	44any supplemental coverage provided under state law in the event of an insurance company
75	75	45insolvency;
76	76	46 3. The extent to which annuity payments may become subject to creditor claims or
77	77	47avoidance actions by bankruptcy trustees;
78	78	48 4. Disclosure of any change in the tax treatment of retiree benefits under an annuity
79	79	49contract or other funding vehicle that replaces pension benefits under an ERISA protected plan;
80	80	50 5. Detailed information on the group annuity contract structure, including a schedule of
81	81	51all costs and expenses paid in connection with the transaction; and 4 of 6
82	82	52 6. A copy of any fairness opinions or solvency analysis done in connection with the
83	83	53choice of annuity or other benefit provider.
84	84	54 B. Require mandatory annual disclosures by the benefit provider to all retirees whose
85	85	55benefits are transferred to an insurance company or alternative benefit provider in a de-risking
86	86	56transaction of at least the following:
87	87	57 1. Funding levels of all assets relative to expected liabilities under the assumed pension
88	88	58benefit schedules;
89	89	59 2. Investment performance summary by asset class;
90	90	60 3. Investment performance detail by asset class;
91	91	61 4. Expenses associated with any group annuity contract which shall include payments
92	92	62made to retirees and administrative expenses;
93	93	63 5. Changes in actuarial assumptions, if any; and
94	94	64 6. A list of all disclosure materials filed with the state Insurance Department and
95	95	65procedures for obtaining copies of any such materials at a reasonable cost to retirees.
96	96	66 Section 8. Opt Out Option
97	97	67 Retirees subject to pension de-risking transactions shall receive at least 90 days’ prior
98	98	68written notice and an opportunity to opt out from any pension de-risking transaction that attempts
99	99	69to transfer retiree benefits from an ERISA protected plan to a substitute pension benefit provider
100	100	70governed under state law. Retirees choosing to opt out of any de-risking transaction shall be
101	101	71given other options by the annuity provider at least one of which shall include an upfront lump 5 of 6
102	102	72sum payout of the net present value of the individual retiree’s future benefits discounted at a rate
103	103	73no greater than 200 basis points over the average for the 10 year United States Treasury Note
104	104	74over the preceding 90 day period.
105	105	75 Section 9. Assets for Benefit of Retirees
106	106	76 Insurance companies, annuity providers, and other benefit providers that replace pension
107	107	77plans in de-risking transactions shall hold retiree assets in trust for the benefit of the retirees.
108	108	78 Section 10. Creditor protections for annuity payments
109	109	79 Annuity payments under group annuity contracts that replace pension benefits under
110	110	80ERISA protected defined benefit plans shall be exempt from the claims of creditors and
111	111	81bankruptcy trustees other than claims arising under a qualified domestic relations order.
112	112	82 Section 11. Lump sum options for retirees
113	113	83 Retirees subject to pension de-risking transactions shall have the right to request a lump
114	114	84sum cash out option at transfer and at regular intervals thereafter provided the retiree can certify
115	115	85that they received independent legal or financial advice regarding the tax consequences and
116	116	86dissipation risks associated with lump sum distributions.
117	117	87 Section 12. Subsequent transfers
118	118	88 No group annuity contract issued in connection with a de-risking transaction can be
119	119	89subsequently transferred by the owner or annuity provider without prior written approval by the
120	120	90Commissioner which approval shall be conditioned upon a favorable solvency analysis obtained
121	121	91from an independent entity approved by the Commissioner. 6 of 6
122	122	92 Section 13. Retiree Disclosure Notice
123	123	93 Every insurer or other benefit provider to which this Act applies shall mail or cause to be
124	124	94mailed to every annuitant, retiree, policyholder or subscriber, within 90 days of the effective date
125	125	95of this Act, a notice regarding the Act’s provisions. The form of such notice shall be prescribed
126	126	96by the Commissioner.
127	127	97 Section 14. Regulations
128	128	98 The Commissioner is empowered to promulgate regulations necessary for the
129	129	99implementation of this Act, including fines, assessments or penalties for failure to comply with
130	130	100this Act.
131	131	101 Section 15. Effective Date
132	132	102 This Act shall take effect 90 days subsequent to its enactment and shall apply to any
133	133	103pension de-risking or annuitization transaction that has the effect of divesting retirees of ERISA
134	134	104protections.