Iowa Leads 10-State Coalition Defending State Regulation of Pension Transfers

Iowa Attorney General Brenna Bird is spearheading a coalition of ten states defending state insurance agencies' regulatory authority over the transfer of employee pensions in a case before the Fourth Circuit. The case challenges the long-standing practice of transferring employee pensions to state-regulated insurance companies, with some employees arguing, without evidence, for federal oversight. State regulation of these pension transfers is currently well-established and has maintained retiree benefits without loss over the past 30 years, as documented in a 2023 Advisory Council report to the US Department of Labor. AG Bird and the coalition emphasize that additional federal regulation is unnecessary and could undermine effective state supervision of pension funds. Insurance experts note that state insurance departments possess the technical expertise essential for managing long-term pension obligations due to their experience with life insurance and annuities. Such regulatory oversight often benefits pension plans and retirees by ensuring financial stability and protection. The coalition's amicus brief, led by Iowa and including Alabama, Arkansas, Idaho, Indiana, Louisiana, Montana, Nebraska, Oklahoma, and Texas, stresses the importance of preserving state authority in pension regulation. The coalition highlights the efficacy of state-based supervision in securing retiree benefits and maintaining pension fund integrity over several decades. This case reflects broader tensions between state versus federal regulatory roles in pension and insurance markets. This legal effort underscores the ongoing debate on regulatory jurisdiction affecting pension risk transfers—a critical component of managing employee retirement benefits within the U.S. insurance framework. Maintaining state regulatory governance is posited as vital to ensuring the continued reliability and protection of pension plans against potential market risks and administrative complexities. The outcome may influence future insurance and pension regulatory landscapes across multiple states.