Pursuant to a congressional request, GAO reviewed the protection available to retirees receiving benefits from insurance companies in case of insurance company failure, focusing on: (1) how many retirees received their benefits from insurance companies; (2) whether federal and state guarantees were available for those annuitants; and (3) recent financial difficulties in the insurance industry.

GAO found that: (1) insurance industry and government data indicated that 3 million to 4 million retirees and surviving dependents of retirees received annuities that their pension plans purchased from life insurance companies; (2) even though the Employee Retirement Income Security Act of 1974 (ERISA) guaranteed pension plan benefits, those pensioners lost the guarantee when they became dependent on insurance companies for retirement income; (3) many retirees holding such annuities were unaware that federal pension plan guarantees did not extend to them; (4) without federal guarantees, pensioners holding such annuities relied on state guarantees, which sometimes provided incomplete coverage; (5) as of March 1991, three states and the District of Columbia still lacked insurance annuity guarantee provisions; (6) since state laws generally guaranteed a smaller portion of benefits than federal guarantees, some annuitants were unprotected, or only partially protected, if the insurance companies providing their annuities went out of business; (7) it was difficult to determine the extent of potential annuitant losses due to limited data, but industry and government data suggested that no retiree had lost benefits to date; and (8) since 1975, 170 life insurance companies have failed, of which 40 percent failed between 1988 and 1990.