AUSTIN – The seniors group AARP sharply criticized Gov. Rick Perry on Tuesday for vetoing a bill – backed by consumers and the insurance industry – that would have established new safeguards for buying annuities.

The House and Senate passed the measure unanimously, but Perry rejected it Friday, saying it could allow "frivolous litigation."

"The governor's timing couldn't be worse, and his action will hurt many of our members," said AARP Texas president Mary Scott.

She said that the bleak economy brings out the "worst behavior in those who prey on unsuspecting consumers" and that the bill would have helped combat that.

Purchasers buy an annuity – through installment payments or a lump sum – to provide future income for the person or a couple beginning at a certain age, such as 65.

Practices in annuity sales that victimize consumers – particularly seniors – include hidden fees, excessive surrender charges and slick sales pitches that deceive buyers, the AARP said.

The legislation would have ordered disclosure requirements and consumer education standards – such as a "buyer's guide" – in the sale and marketing of annuities.

In his veto, Perry said the potential for lawsuits by annuity purchasers outweighed the benefits for consumers.

"Although the bill establishes standards of transparency and improvements that are important, I believe it will do more harm than good," he said.

Perry said that because state insurance law already has remedies for deceptive practices, the bill would only "create greater opportunities for frivolous litigation throughout the state."

The Texas Association of Life and Health Insurers and the American Council of Life Insurers – representing life insurance companies that sell annuities – saw no such threat and testified in favor of the bill.

Also, many of the standards were developed by the National Association of Insurance Commissioners, which has promoted such model laws in most states to help prevent deceptive practices in the sale of annuity products.

Even the Texas Department of Insurance had called for new safeguards to protect Texans who buy annuities.

Consumer leaders suggested that anti-lawsuit groups were behind the veto, but none testified against the legislation.

Perry said he would direct the Insurance Department to adopt "beneficial provisions" of the bill that are within its rulemaking authority.