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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8921.
Managers of large corporate pension plans will have more
investment options under an exemption proposed today by the U. S. Department of
Labor.
The exemption request was submitted by the Committee on
Investment of Employee Benefit Assets (CIEBA) of the Financial Executives
Institute. CIEBA is an organization of approximately 125 financial executives
who manage the pension assets of their corporations.
Olena Berg, assistant secretary of labor for the Pension
and Welfare Benefits Administration said, "This action is part of the
department's ongoing effort to prudently expand investment options available to
plans. If adopted, the exemption will remove technical restrictions, protect
plan funds from abuse and result in cost savings to employers."
Currently, when in-house managers want a transaction
prohibited by the Employee Retirement Income Security Act (ERISA), they must
either seek an individual exemption from the Labor Department, hire a qualified
professional asset manager or forgo the investment opportunity.
The proposal, which provides relief similar to that of the
1984 professional asset manager exemption, contains a general and three special
exemptions.
Under the general exemption, plans managed by in-house
asset managers (INHAMs) affiliated with the employer sponsoring the plan may
engage in a variety of transactions with service providers if certain
conditions are met. The exemption would only be available to employers whose
plans have at least $250 million in assets, with $50 million under the direct
management of the INHAM. The proposal also would require that the INHAM be a
registered investment advisor and make all decisions concerning the affected
transactions.
In addition, the exemption would require an independent
annual fiduciary audit to determine whether the written procedures adopted by
the INHAM comply with the exemption conditions.
The special exemption for leasing arrangements would allow
a plan managed by an INHAM to lease minimal amounts of office or commercial
space to the employer or affiliated parties acquired through foreclosure by the
plan, and would permit the leasing of residential space to employees of the
employer. A limited exemption proposes to allow places of public accommodation
--such as a hotel or motel -- owned by a plan and managed by an INHAM to
provide services and facilities to parties of interest to the plan.
Berg said, "Plan assets will be safeguarded since the
proposal covers investments which pose little potential for abuse. This action
imposes conditions that assure independence in the decision- making process of
in-house managers."
Written comments and requests to hold a public hearing
should be addressed to the Office of Exemption Determinations, Pension and
Welfare Benefits Administration, Room N. 5649, U. S. Department of Labor, 200
Constitution Avenue, N.W., Washington, D. C. 20210, Attention: INHAM.
Archived News Release--Caution:
information may be out of date.
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