By Anne Gelhaus
Town employees past and present who want to get their money out of their deferred compensation accounts will have to wait until the Michigan state insurance commissioner decides what to do with the funds.
Since March 1991, all those enrolled in the town's deferred compensation savings option program have been invested in a Confederation Life Guaranteed Insurance Contract. The principal would have been due this month, but the Canadian insurance company went out of business last year, and its assets are currently under the control of the Michigan insurance commissioner.
According to Town Manager David Knapp, Detroit-based General Motors was heavily invested in Confederation Life; thus, financial control of the insurance company fell to the auto manufacturer's home state.
Assistant Town Manager Jim Piper said the Michigan insurance commissioner is working on a rehabilitation plan to assure that investors receive their principal and at least a portion of their interest payments. That plan, Piper said, is due out this spring.
"Usually," he added, "other insurance companies step into the shoes of the company having the problems. The rehabilitation plan will probably include a consortium of companies that will take over [Confederation Life's] investments."
Piper said Aetna has already bought out General Motors' investments in the insurance company, but there is still a great amount of money left for the insurance commissioner to dole out.
"This isn't something that's going to get resolved quickly," he added, "but these things usually get resolved."
At least one former town employee would like that resolution to come sooner instead of later. Shirley Egan, who used to work at the Los Gatos Library, said she'd like some word from the town as to the status of her investment.
Meanwhile, Piper said he's trying to get the word out to town employees that a deferred compensation fund is not a guaranteed investment.
"We're trying to improve communication with our employees to let them know that any money they invest is potentially at risk,"
he added.
This article appeared in the Los Gatos Weekly-Times, March 13, 1996.
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