Pension-plan assets must be invested and used solely to provide for the
retirements of plan participants, not to advance political, corporate or other
goals, according to new bulletins from the Department of Labor.
One DOL bulletin, on economically targeted investments, clarifies that
“fiduciary consideration of non-economic factors should be rare and, when
considered, must comply with ERISA’s rigorous fiduciary standards,” according to
a DOL news release issued Thursday, October 16.
The second bulletin, on shareholder rights issues, clarifies that plan
fiduciaries “may never increase expenses, sacrifice investment returns or reduce
the security of plan benefits in order to promote legislative, regulatory or
public policy goals that have no connection to the payment of benefits or plan
administrative expenses.”
Officials at the U.S. Chamber of Commerce had sought the clarifications; they
said DOL policy during the Clinton administration encouraged unions and others
to consider non-economic factors when investing pension funds, and the trend has
continued.
“This is an effort to bring the pendulum back to make it absolutely clear
that investment decisions should be made on economic factors alone,” said Randy
Johnson, chamber vice president, labor, immigration and employee benefits.
Damon Silvers, associate general counsel at the AFL-CIO in Washington, said
the new bulletins, to be published in the Federal Register on Friday, October
17, had not changed the underlying requirements but made them more confusing.
Fiduciaries continue to be obliged by ERISA to vote proxies in the pension
plan’s economic best interests and to subordinate “collateral” considerations to
economic factors,. Silvers said.
Filed by Doug Halonen of Pensions & Investments, a sister publication of
Workforce Management. To comment, e-mail editors@workforce.com.
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