wo interest groups—life insurers and the mutual fund industry—are squaring off
over which qualified default investment alternatives, or QDIAs, companies should
be allowed to offer employees under the Department of Labor’s "safe harbor" provisions.
Here are excerpts from the dueling comment letters submitted to the department.
From the American Council of Life Insurers:
"Instead of creating a true ‘safe harbor’ and identifying factors that plan fiduciaries
need to consider in selecting a default investment option, [the DOL’s Employee Benefits
Security Administration] chose to endorse three specific types of investment products—lifecycle
and target retirement date funds, balanced funds, and individual participant accounts
managed by a professional investment manager. These current QDIA options do not
include an investment option that is insulated from the volatility of equities,
primarily focused on the preservation of principal, or that offers a guaranteed
rate of return or guaranteed income during retirement. Guaranteed Products offer
these critical participant protections. We believe this is an unacceptable shortcoming
of the regulation."
From the Investment Company Institute:
"The range of options outlined in the Department’s safe harbor proposal will
achieve the goals of automatic enrollment. Including stable-value funds would be
inconsistent with the purpose of measures enacted in the Pension Protection Act
of 2006 to facilitate automatic enrollment and enhance the utility of 401(k) plans.
Research cited in [the American Council of Life Insurers’] letter in support of
using stable-value funds as default investments is incomplete or misleading and
ignores important policy considerations." Click here for the
full text of letter.
Additional Links:
Department of Labor Fact Sheet: Proposed Regulation Relating To Default Investment
Alternatives Under Participant Directed Individual Account Plans
ACLI issue
brief on workplace retirement issues
= Member Only
