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ARTICLE · 18 JULY 2024

DOL Proposes Exemption For Pension "De-Risking" With Captive Insurer

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Earlier this month, the Department of Labor proposed a significant prohibited transaction exemption that would allow a plan sponsor's captive insurer to reinsure pension annuity risks.

United StatesInsurance
David Levine
David Levine
Louis Mazawey
Louis Mazawey
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Earlier this month, the Department of Labor proposed a significant prohibited transaction exemption that would allow a plan sponsor's captive insurer to reinsure pension annuity risks. Proposed Exemption From Certain Prohibited Transaction Restrictions Involving Memorial Sloan Kettering Cancer Center (MSKCC) or the Applicant Located in New York, New York, 89 Fed. Reg. 56422 (July 9, 2024). While DOL has issued a long line of exemptions for captive insurance involving group life, disability, and other welfare benefits, this is the first proposed exemption covering pension risks – which typically are more complex and involve large dollar amounts.

In this alert, we briefly review the key benefits of captive insurance, the pattern of DOL exemptions for group welfare benefit captives, and the key conditions of the new proposal involving pension annuity risks.

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