Increasing Access to a Secure Retirement Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1439 To amend the Employee Retirement Income Security Act of 1974 to provide a fiduciary safe harbor for the selection of a lifetime income provider, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 28, 2019 Mr. WALBERG (for himself, Ms. BLUNT ROCHESTER, Mr. DAVID P. ROE of Tennessee, Ms. SEWELL of Alabama, Mr. LOEBSACK, and Mr. MITCH- ELL) introduced the following bill; which was referred to the Committee on Education and Labor A BILL To amend the Employee Retirement Income Security Act of 1974 to provide a fiduciary safe harbor for the selec- tion of a lifetime income provider, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Increasing Access to 4 a Secure Retirement Act of 2019’’. 5 VerDate Sep 11 2014 02:04 Mar 13, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1439.IH H1439 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1439 IH SEC. 2. FIDUCIARY SAFE HARBOR FOR SELECTION OF LIFE- 1 TIME INCOME PROVIDER. 2 Section 404 of the Employee Retirement Income Se- 3 curity Act of 1974 (29 U.S.C. 1104) is amended by adding 4 at the end the following: 5 ‘‘(e) SAFE HARBOR FOR ANNUITY SELECTION.— 6 ‘‘(1) IN GENERAL.—With respect to the selec- 7 tion of an insurer for a guaranteed retirement in- 8 come contract, the requirements of subsection 9 (a)(1)(B) will be deemed to be satisfied if a fidu- 10 ciary— 11 ‘‘(A) engages in an objective, thorough, 12 and analytical search for the purpose of identi- 13 fying insurers from which to purchase such con- 14 tracts; 15 ‘‘(B) with respect to each insurer identified 16 under subparagraph (A)— 17 ‘‘(i) considers the financial capability 18 of such insurer to satisfy its obligations 19 under the guaranteed retirement income 20 contract; and 21 ‘‘(ii) considers the cost (including fees 22 and commissions) of the guaranteed retire- 23 ment income contract offered by the in- 24 surer in relation to the benefits and prod- 25 uct features of the contract and adminis- 26 VerDate Sep 11 2014 02:04 Mar 13, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1439.IH H1439 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1439 IH trative services to be provided under such 1 contract; and 2 ‘‘(C) on the basis of such consideration, 3 concludes that— 4 ‘‘(i) at the time of the selection, the 5 insurer is financially capable of satisfying 6 its obligations under the guaranteed retire- 7 ment income contract; and 8 ‘‘(ii) the relative cost of the selected 9 guaranteed retirement income contract as 10 described in subparagraph (B)(ii) is rea- 11 sonable. 12 ‘‘(2) FINANCIAL CAPABILITY OF THE IN- 13 SURER.—A fiduciary will be deemed to satisfy the 14 requirements of paragraphs (1)(B)(i) and (1)(C)(i) 15 if— 16 ‘‘(A) the fiduciary obtains written rep- 17 resentations from the insurer that— 18 ‘‘(i) the insurer is licensed to offer 19 guaranteed retirement income contracts; 20 ‘‘(ii) the insurer, at the time of selec- 21 tion and for each of the immediately pre- 22 ceding 7 plan years— 23 ‘‘(I) operates under a certificate 24 of authority from the insurance com- 25 VerDate Sep 11 2014 02:04 Mar 13, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1439.IH H1439 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1439 IH missioner of its domiciliary State 1 which has not been revoked or sus- 2 pended; 3 ‘‘(II) has filed audited financial 4 statements in accordance with the 5 laws of its domiciliary State under ap- 6 plicable statutory accounting prin- 7 ciples; 8 ‘‘(III) maintains (and has main- 9 tained) reserves which satisfies all the 10 statutory requirements of all States 11 where the insurer does business; and 12 ‘‘(IV) is not operating under an 13 order of supervision, rehabilitation, or 14 liquidation; 15 ‘‘(iii) the insurer undergoes, at least 16 every 5 years, a financial examination 17 (within the meaning of the law of its domi- 18 ciliary State) by the insurance commis- 19 sioner of the domiciliary State (or rep- 20 resentative, designee, or other party ap- 21 proved by such commissioner); and 22 ‘‘(iv) the insurer will notify the fidu- 23 ciary of any change in circumstances oc- 24 curring after the provision of the represen- 25 VerDate Sep 11 2014 02:04 Mar 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1439.IH H1439 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1439 IH tations in clauses (i), (ii), and (iii) which 1 would preclude the insurer from making 2 such representations at the time of 3 issuance of the guaranteed retirement in- 4 come contract; and 5 ‘‘(B) after receiving such representations 6 and as of the time of selection, the fiduciary 7 has not received any notice described in sub- 8 paragraph (A)(iv) and is in possession of no 9 other information which would cause the fidu- 10 ciary to question the representations provided. 11 ‘‘(3) NO REQUIREMENT TO SELECT LOWEST 12 COST.—Nothing in this subsection shall be construed 13 to require a fiduciary to select the lowest cost con- 14 tract. A fiduciary may consider the value of a con- 15 tract, including features and benefits of the contract 16 and attributes of the insurer (including, without lim- 17 itation, the insurer’s financial strength) in conjunc- 18 tion with the cost of the contract. 19 ‘‘(4) TIME OF SELECTION.— 20 ‘‘(A) IN GENERAL.—For purposes of this 21 subsection, the time of selection is— 22 ‘‘(i) the time that the insurer and the 23 contract are selected for distribution of 24 VerDate Sep 11 2014 02:04 Mar 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1439.IH H1439 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1439 IH benefits to a specific participant or bene- 1 ficiary; or 2 ‘‘(ii) if the fiduciary periodically re- 3 views the continuing appropriateness of the 4 conclusion described in paragraph (1)(C) 5 with respect to a selected insurer, taking 6 into account the considerations described 7 in such paragraph, the time that the in- 8 surer and the contract are selected to pro- 9 vide benefits at future dates to participants 10 or beneficiaries under the plan. 11 Nothing in the preceding sentence shall be con- 12 strued to require the fiduciary to review the ap- 13 propriateness of a selection after the purchase 14 of a contract for a participant or beneficiary. 15 ‘‘(B) PERIODIC REVIEW.—A fiduciary will 16 be deemed to have conducted the periodic re- 17 view described in subparagraph (A)(ii) if the fi- 18 duciary obtains the written representations de- 19 scribed in clauses (i), (ii), and (iii) of paragraph 20 (2)(A) from the insurer on an annual basis, un- 21 less the fiduciary receives any notice described 22 in paragraph (2)(A)(iv) or otherwise becomes 23 aware of facts that would cause the fiduciary to 24 question such representations. 25 VerDate Sep 11 2014 02:04 Mar 13, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1439.IH H1439 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 1439 IH ‘‘(5) LIMITED LIABILITY.—A fiduciary which 1 satisfies the requirements of this subsection shall not 2 be liable following the distribution of any benefit, or 3 the investment by or on behalf of a participant or 4 beneficiary pursuant to the selected guaranteed re- 5 tirement income contract, for any losses that may 6 result to the participant or beneficiary due to an in- 7 surer’s inability to satisfy its financial obligations 8 under the terms of such contract. 9 ‘‘(6) DEFINITIONS.—For purposes of this sub- 10 section— 11 ‘‘(A) INSURER.—The term ‘insurer’ means 12 an insurance company, insurance service, or in- 13 surance organization, including affiliates of 14 such companies. 15 ‘‘(B) GUARANTEED RETIREMENT INCOME 16 CONTRACT.—The term ‘guaranteed retirement 17 income contract’ means an annuity contract for 18 a fixed term or a contract (or provision or fea- 19 ture thereof) which provides guaranteed bene- 20 fits annually (or more frequently) for at least 21 the remainder of the life of the participant or 22 the joint lives of the participant and the partici- 23 VerDate Sep 11 2014 02:04 Mar 13, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1439.IH H1439 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 1439 IH pant’s designated beneficiary as part of an indi- 1 vidual account plan.’’. 2 Æ VerDate Sep 11 2014 02:04 Mar 13, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H1439.IH H1439 pamtmann on DSKBFK8HB2PROD with BILLS