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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8921.
The U. S. Department of Labor's Pension and Welfare
Benefits Administration today proposed a class exemption in a major step to
streamline the process under which employee benefit plans may engage in
transactions that are beneficial for plans but are not permitted by federal law
without the department's prior approval. The class exemption applies only to
plans governed by federal law.
The Administration's goals under reinvention and pension
simplification require federal government agencies to eliminate cumbersome
regulations. As part of the effort to reduce the regulatory burdens associated
with securing individual exemptions for transactions prohibited under the
Employee Retirement Income Security Act of Act of 1974 (ERISA), the proposal
would allow plans to engage in the transactions following a demonstration to
PWBA that the transactions are substantially similar to those covered by at
least two previous exemptions granted by the department.
ERISA allows the department to grant a conditional or
unconditional exemption from all or any part of the restrictions imposed by
ERISA's prohibited transaction provisions.
Based on its experience in considering exemption
applications for over 20 years, PWBA has found that many exemption applications
involve routine transactions that are similar to those contained in prior
exemptions. Under the proposed class exemption, the applicant must notify
participants and beneficiaries of the transaction upon expiration of a 45-day
period of consideration by the department of the application, and may proceed
with the transaction in as little as 30 days following completion of
notification to participants and beneficiaries.
"This class exemption has the potential to eliminate much
of the work the department must now do in processing routine transactions,
freeing resources to concentrate on more difficult cases," said PWBA Assistant
Secretary Olena Berg. "This also opens up more investment opportunities for
plans which can be beneficial to plan participants."
The draft proposal also requires applicants to:
- file with the department a written statement of their intent to
comply with the class exemption;
- explain why the proposed transaction presents little or no
opportunity for abuse or risk of loss to the plan, and describe how the
proposed transaction compares to the previously granted exemptions.
- The proposal also requires the appointment of an independent
fiduciary in cases involving potential conflicts of interest to represent the
interests of plan beneficiaries.
The proposed class exemption is scheduled to be published
in the Nov. 27 Federal Register.
Archived News Release--Caution:
information may be out of date.
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