ICI Takes on Insurance Industry

The Investment Company Institute urged the White House Office of Management and Budget to reject efforts by the life insurance industry to include stable-value funds among default investment options available to employers who adopt automatic enrollment, Investment News reports.   In March, the American Council of Life Insurers asked the OMB to disallow the Department of Labor proposal making lifecycle, balanced funds and so-called target-risk funds the only acceptable default options for employers who choose to adopt automatic enrollment.   According to the DOL guidelines published last September, employers who chose to automatically invest employees in stable-value funds, a common practice among those who use automatic enrollment already, would not be granted safe-harbor protection against lawsuits from employees disappointed with their portfolio value.   In last week’s letter ICI Chief Economist Brian Reid urged the OMB to stay the course and exclude stable-value funds from the safe harbor. Including them, he said “would be inconsistent with the purpose of measures enacted in the Pension Protection Act of 2006 to facilitate automatic enrollment and enhance the utility of 401(k) plans.”   The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.