EBSA Final Rule
Rules and Regulations For the Allocation of Fiduciary Responsibility, Federal Retirement Thrift Investment Board [05/30/2000]
[PDF Version]
Volume 65, Number 104, Page 34393-34395
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Part 2584
RIN 1210-AA79
Rules and Regulations For the Allocation of Fiduciary
Responsibility, Federal Retirement Thrift Investment Board
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Direct final rule.
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SUMMARY: This document includes amendments authorizing the Executive
Director of the Federal Retirement Thrift Investment Board (Board) to
allocate certain fiduciary responsibilities for two new investment
funds to investment managers. It also provides definitions for the two
new funds, updates the definition of investment manager and makes other
miscellaneous corrections to the regulations.
DATES: This rule is effective on July 14, 2000 without further notice,
unless the Department receives significant adverse written comment by
July 29, 2000. If the Department receives such comments, it will
publish a timely withdrawal of the direct final rule in the Federal
Register and inform the public that the rule will not take effect.
ADDRESSES: Written comments (preferably at least three copies) should
be submitted to the Office of Regulations and Interpretations, Pension
and Welfare Benefits Administration, Room N-5671, U.S. Department of
Labor, Washington, DC 20210, and marked ``Attention: FERSA Allocation
Regulation.'' All submissions will be available for public inspection
in the Public Documents Room, Pension and Welfare Benefits
Administration, Room N-5507, 200 Constitution Avenue NW, Washington, DC
20210.
FOR FURTHER INFORMATION CONTACT: Rudy Nuissl, Pension and Welfare
Benefits Administration, U.S. Department of Labor, Rm 5669, 200
Constitution Ave., N.W., Washington, DC 20210, tel. (202) 219-7461.
This is not a toll-free number.
SUPPLEMENTARY INFORMATION: Subchapter III of the Federal Employees'
Retirement System Act of 1986 (FERSA), Pub. L. No. 99-335, 100 Stat.
514, codified largely at 5 U.S.C. 8351 and 8401-8479, created a
retirement savings plan for Federal employees known as the Thrift
Savings Plan (TSP). As provided at 5 U.S.C. 8437, the TSP is funded by
the Thrift Savings Fund (Fund).
Pursuant to 5 U.S.C. 8474(b)(5) and (c)(1), the Executive Director
of the Board is granted authority to prescribe such regulations as may
be necessary for the administration of the Fund. However, these
statutory provisions expressly prohibit the Executive Director from
prescribing any regulations relating to fiduciary responsibilities with
respect to the Fund. Instead, at 5 U.S.C. 8477(e)(1)(E), the Secretary
of Labor is directed to prescribe, in regulations, procedures by which
fiduciary responsibilities may be allocated among fiduciaries,
including investment managers. The Secretary of Labor published
regulations setting forth such procedures in final form in the Federal
Register on December 29, 1988 (53 FR 52664). These regulations comprise
29 CFR part 2584.
Pursuant to 29 CFR 2584.8477(e)-2(b), the Executive Director may
allocate certain fiduciary responsibilities in connection with the
management and investment of the Fixed Income Investment Fund (F Fund)
to a qualified professional asset manager(s). Section 2584.8477(e)-2(c)
of title 29, Code of Federal Regulations, provides that the Executive
Director may also allocate certain fiduciary responsibilities in
connection with the management and investment of the Government
Securities Investment Fund (G Fund) and the Common Stock Index
Investment Fund (C Fund) to an investment manager(s). Section
2584.8477(e)-6 of title 29, Code of Federal Regulations, provides
definitions for these investment funds.
The Thrift Savings Investment Funds Act of 1996, Pub. L. 104-208,
110 Stat. 3009-372, authorized the creation of two new investment
funds. The new funds are the Small Capitalization Stock Index
Investment Fund (S Fund) and the International Stock Index Investment
Fund (I Fund).
This document provides in Sec. 2584.8477(e)-2 that, in addition to
the G, C, and F Funds, the Executive Director may allocate certain
fiduciary responsibilities in connection with the management and
investment of the two new funds (S and I Funds) to an investment
manager(s). The rule also provides definitions for these two new funds
in Sec. 2584.8477(e)-6, which conform to the definitions in sections of
the Thrift Savings Investment Funds Act of 1996.
Because part 2584 originally adopted the definition of investment
manager provided in the Employee Retirement Income Security Act of 1974
(ERISA), Pub. L. 93-406, 88 Stat. 829, 29 U.S.C. 1002, which was later
amended by Act of November 10, 1997, Sec. 1(a), Pub. L. 105-72, 111
Stat. 1457, this document replaces the old definition of investment
manager in 29 CFR 2584.8477(e)-6 with the amended definition as
currently provided in ERISA.
Furthermore, this rule adds the word ``Fund'' to Sec. 2584.8477(e)-
2(c), which was inadvertently omitted from ``Common Stock Index
Investment Fund'' in the final rule, and updates the United States Code
citation for FERSA in Sec. 2584.8477(e)-6(a).
Direct Final Rulemaking Procedure
The Department has determined that this rule shall be effective as
a final rule 45 days after publication in the Federal Register. As
explained more fully above,
[[Page 34394]]
the purpose of this rulemaking is to conform the existing regulation
with the creation of two new investment funds authorized by the Thrift
Savings Investment Funds Act of 1996, and to make certain other minor
changes and corrections.
As a result, the Department anticipates that this regulation will
not result in adverse or negative comment and, therefore, is issuing it
as a direct final rule. The amendment will enhance the ability of
federal employees to diversify their account balances in the Thrift
Investment Fund. In accordance with 5 U.S.C. 553(b), the Department for
good cause finds that notice and public procedure on this rule are
unnecessary.
Unless a written adverse or negative comment is received within the
comment period, the regulation will become effective on the date
specified above. If the Department does receive, within the comment
period, an adverse or negative comment, a document withdrawing the
direct final rule will be published in the Federal Register, and a
notice of proposed rulemaking may be published with a new comment
period.
Executive Order 12866 Statement
The regulation set forth in this document is not classified as a
``significant regulatory action'' under Executive Order 12866 because
it is not likely to result in: (1) An annual effect on the economy of
$100 million or more; (2) a major increase in costs or prices for
consumers, individual industries, Federal, state, or local government
agencies, or geographic regions; or (3) significant adverse effects on
competition, employment, investment, productivity, innovation, or the
ability of United States-based enterprises to compete with foreign-
based enterprises in domestic or export markets. As a result this rule
is not subject to review by the Office of Management and Budget.
Regulatory Flexibility Act Statement
Because this rule is being promulgated without a notice of proposed
rulemaking it is not covered by the Regulatory Flexibility Act.
Nevertheless, the Department has determined that it will not have a
significant economic impact on a substantial number of small entities.
The rule merely makes changes necessary to permit the operation of two
new investment funds authorized under the Thrift Savings Investment
Funds Act of 1996 in the same manner as the existing investment funds.
Paperwork Reduction Act
The rule being issued here is not subject to the requirements of
the Paperwork Reduction Act of 1996 (44 U.S.C. 3501 et seq.) because it
does not contain an information collection request as defined in 44
U.S.C. 3502(3).
Executive Order 13132 Federalism
This rule affects only the authority of the Executive Director of
the Thrift Investment Board and has no federalism implications.
Unfunded Mandates Reform Act of 1995
Pursuant to the Unfunded Mandates Reform Act of 1995, Pub. L. 104-
4, Sec. 201, 109 Stat. 48, 64, the effects of this regulation on state,
local, and tribal governments and the private sector have been
assessed. This regulation will not compel the expenditure in any one
year of $100 million or more by state, local, and tribal governments,
in the aggregate, or by the private sector. Therefore, a statement
under Sec. 202, 109 Stat. 48, 64-65, is not required.
Small Business Regulatory Enforcement Fairness Act--Congressional
Review
The rule being issued here is subject to the provisions of the
Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C.
801 et seq.) and has been transmitted to Congress and the Comptroller
General for review. The rule is not a ``major rule'' as that term is
defined in 5 U.S.C. 804, because it is not likely to result in (1) an
annual effect on the economy of $100 million or more: (2) a major
increase in costs or prices for consumers, individual industries, or
federal, State or local government agencies, or geographic regions; or
(3) significant adverse effects on competition, employment, investment,
productivity, innovations, or on the ability of the United States-based
enterprises to compete with foreign-based enterprises in domestic or
export markets.
Statutory Authority
The regulation set forth herein is issued pursuant to 5 U.S.C.
8477(e)(1)(E) and under Secretary of Labor's Order No. 1-87.
List of Subjects in 29 CFR Part 2584
Employee benefit plans, Fiduciary, Government employees, Pensions,
Retirement, Trusts and trustees.
In view of the foregoing, the Department of Labor amends 29 CFR
part 2584 as follows:
PART 2584--[AMENDED]
1. The authority citation for part 2584 continues to read as
follows:
Authority: 5 U.S.C. 8477(e)(1)(E) and Secretary of Labor's Order
1-87, 52 FR 13139 (April 21, 1987).
2. Section 2584.8477(e)-(2) is amended by revising paragraph (c) to
read as follows:
Sec. 2584.8477(e)-2 Allocation of fiduciary duties.
* * * * *
(c) The Executive Director may allocate authority and
responsibility for the investment and management of the Government
Securities Investment Fund, the Common Stock Index Investment Fund, the
International Stock Index Investment Fund and the Small Capitalization
Stock Index Investment Fund to an investment manager(s).
* * * * *
3. Section 2584.8477(e)-6 is amended as follows:
a. by redesignating paragraphs (h), (i) and (j) as (i), (j) and
(l), respectively;
b. by removing the periods in paragraph (e)(2) and the newly
redesignated paragraph (j), and by inserting semicolons in their
places; and
c. by revising paragraph (a) and the newly redesignated paragraph
(i)(2) and inserting new paragraphs (h) and (k) to read as follows:
Sec. 2584.8477(e)-6 Definitions.
* * * * *
(a) Act means the Federal Employees' Retirement System Act of 1986,
5 U.S.C. 8401 et seq. (Supp. III 1997);
* * * * *
(i) * * *
(1) * * *
(2) Is:
(i) Registered as an investment adviser under the Investment
Advisers Act of 1940 (15 U.S.C. 80b-1),
(ii) Not registered as an investment adviser under such Act by
reason of paragraph (1) of section 203A(a) of such Act (15 U.S.C. 80b-
3a) but is registered as an investment adviser under the laws of the
state (referred to in such paragraph (1)) in which it maintains its
principal office and place of business, and, at the time the fiduciary
last filed the registration form most recently filed by the fiduciary
with such state in order to maintain the fiduciary's registration under
the laws of such state, also filed a copy of such form with the
Secretary of Labor,
(iii) A bank, as defined in that Act, or
(iv) An insurance company qualified to perform services described
in
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paragraph (i)(1) of this section under the laws of more than one state,
and
(3) * * *
* * * * *
(h) International Stock Index Investment Fund means the fund
established under 5 U.S.C. 8438(b)(1)(E);
* * * * *
(k) Small Capitalization Stock Index Investment Fund means the fund
established under 5 U.S.C. 8438(b)(1)(D);
* * * * *
Signed at Washington, DC , this 22nd day of March, 2000.
Leslie Kramerich,
Acting Assistant Secretary, Pension and Welfare Benefits
Administration, Department of Labor.
[FR Doc. 00-13250 Filed 5-26-00; 8:45 am]
BILLING CODE 4510-29-P
