PLANSPONSOR - August/September 2020 - 8

RULES & REGULATIONS
and practical terms, for retirement plans
to use ESG investments. The proposed
regulation does not fully do away with the
possibility of using ESG funds and strategies,
but plan sponsors can expect greater
scrutiny of their choices should the regulation
be fully implemented. Although the
DOL gave the asset management industry
and the public just 30 days to submit
comments on the unexpected regulation,
there are now nearly 1,100 comments
published on the agency's website. Many
of these reflect the growing public interest
in using ESG investments. (See Inside
Angle, page 47).
Colorado Adopts
An Auto-IRA Program
A bill signed in mid-July by Colorado
Governor Jared Polis will require
employers that have at least five
employees but do not offer a retirement
plan to provide a retirement savings
opportunity through the state. According
to the bill's text, more than 900,000
working Coloradans-i.e., about 40%-
are without access to a retirement savings
program at their job. The bill establishes,
in the office of the state treasurer, the
Colorado Secure Savings Program Board
to create and implement the program.
Fees Get Slashed
Details of a settlement of an Employee
Retirement Income Security Act (ERISA)
lawsuit against Princeton University state
that the university has agreed to stipulations
that include paying $5.8 million to
settle a claim alleging excessive fees for
recordkeeping and investments.
The initial lawsuit charged the university
with failing to leverage its retirement
plans' collective and massive bargaining
power to benefit participants and beneficiaries.
Defendants were also accused of inappropriately
contracting with two recordkeepers
instead of one and with failing to
investigate, examine and understand the
real cost to participants for administrative
services, thereby causing the plans to pay
8 PLANSPONSOR.COM August - September 2020
unreasonable and excessive fees for recordkeeping
and investments.
The settlement agreement notes
that Princeton negotiated a significant
reduction in its plans' recordkeeping fees
with TIAA, lowering, effective October 1,
annual fees from 6 basis points (bps) to
2.9 bps. It was further agreed that TIAA
would refund to the plans any fees or other
revenue sharing-including 12b-1 fees-
in excess of 2.9 bps. " As a result, the plans'
total expenses on a per-participant-or 'allin'-basis
were reduced to approximately
$49 per year, " the agreement states.
" ... more than
900,000 working
Coloradans-i.e.,
about 40%-are
without access
to a retirement
savings program
at their job. "
States Could Help Return
Unclaimed Funds
The Advisory Council on Employee
Welfare and Pension Benefit Plans has
issued a report to Secretary of Labor
Eugene Scalia regarding transferring
money that retirement plans continue to
hold, due to checks being left uncashed,
to state unclaimed property programs. In
the report, aptly titled " Voluntary Transfers
of Uncashed Checks From ERISA
[Employee Retirement Income Security
Act] Plans to State Unclaimed Property
Programs, " the council found that such
programs return property to people as
much as 72% of the time. It recommends
that the Department of Labor (DOL)
issue guidance on these programs.
The council notes that many plans
that cannot find a participant or beneficiary
consider the sums forfeited and use
them to benefit the plan, typically to pay
plan expenses or reduce employer contributions.
The IRS permits this but requires
employers to repay the money to participants
should they be found. All 50 states
have an unclaimed property program.
These programs maintain websites; there
is also a national website, missingmoney
.com, in which 40 states and three territories
participate.
VALIC Charged With
Disclosure Failures
The Securities and Exchange Commission
(SEC) has charged VALIC Financial
Advisors Inc. (VFA), in a pair of actions,
for failing to disclose to teachers and
other investors practices that generated
millions of dollars in fees and other financial
benefits for VFA.
In the first action, the SEC found
that VFA failed to disclose that its parent
company paid a for-profit entity owned by
Florida K-12 teachers' unions to promote
VFA and its parent company services
to teachers. In the second action, the
SEC found that VFA failed to disclose
conflicts of interest regarding millions
of dollars of financial benefits it received
for promoting funds in a certain program
offered by its clearing broker. These funds
were generally more expensive for clients
than comparable mutual funds available.
VFA agreed to pay approximately
$40 million to settle the charges in these
two actions. In the first action, VFA
agreed to cap advisory fees for all Florida
K-12 teachers who currently participate-
and, in some cases, those who prospectively
participate-in its advisory product
in Florida's 403(b) and 457(b) retirement
programs. The monetary relief will be
placed in a fund for distribution to investors
affected by this conduct. -PS
For in-depth coverage of these topics and more, go to PLANSPONSOR.com/compliance.
http://www.missingmoney.com http://www.missingmoney.com http://www.PLANSPONSOR.com/compliance http://www.PLANSPONSOR.COM
PLANSPONSOR - August/September 2020

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