The lawsuit, Harris Trust & Savings Bank v. John Hancock, involved the application of the Employee Retirement Income Security Act of 1974 (ERISA) to group annuity contracts purchased by retirement funds.
The district court ruling awarded the plaintiffs $19.5 million plus unspecified amounts for pre-judgment interest, attorney fees and other costs. In a press release Hancock officials said they would file an appeal and challenge both the basis of the lower court’s ruling and its award of damages.
In 1993 the Supreme Court held (6-3) that some transactions between insurance companies and pension plans are governed by ERISA, which rendered life insurers fiduciaries for assets they receive from pension plans and hold in their general accounts.
On Jan. 4 the Labor Department issued a long-awaited final rule that somewhat narrowed the implications of the Supreme Court’s decision by eliminating some of ERISA’s requirements when the fiduciary is an insurance company. However, the regulation only applies to policies issued on or before Dec. 31, 1998.
– Nevin Adams email@example.com
For more information on the Harris Trust case: http://www.plansponsor.com/archives/test/93-04psapril/apr93ps029.asp