PLANSPONSOR - February - March 2022 - 8

RULES & REGULATIONS
when making investments, publicly reveal
its holdings and monitor the approach of
its external fund managers.
Last June, the Government Accountability
Office recommended that the
executive director of the Federal Retirement
Thrift Investment Board evaluate the
Federal Thrift Savings Plan's investment
offerings, in light of risks related to climate
change. And, in October, EBSA announced
a proposed rule that would remove barriers
to retirement plan fiduciaries being able to
consider climate change and other environmental,
social and governance factors
when they select investments and exercise
shareholder rights.
The RFI ...
follows President
Joe Biden's
executive order
on climaterelated
financial
risk ...
EBSA says the request for information
deals with a broader set of questions
than did last October's proposed rule,
" Prudence and Loyalty in Selecting Plan
Investments and Exercising Shareholder
Rights, " and is a different initiative. The
RFI solicits general input on agency
actions that can be taken under ERISA,
FERSA and other relevant laws and poses
specific questions related to data collection
and fiduciary issues under ERISA,
the Federal Thrift Savings Plan under
FERSA, and other miscellaneous topics.
The RFI's comment period runs for
90 days, which started on its publication
date of February 11 in the Federal
Register; it includes instructions for how
to submit comments.
Brokerage Windows
The Employee Retirement Income Security
Act Advisory Council has revisited
the topic of brokerage windows in selfdirected
retirement plans in a recent
report to Department of Labor Secretary
Marty Walsh.
In 2012, as part of its ERISA Section
404(a)(5) participant fee disclosure regulations,
the DOL issued two Field Assistance
Bulletins-FAB 2012-02 and 201202R-to
clarify points about the investment
option. These noted, respectively,
what information related to a brokerage
window must be disclosed under participant-level
fee disclosures, and that a
brokerage window is not in and of itself a
designated investment alternative.
Then, in 2014, to increase its understanding
of the prevalence and role
of brokerage windows in participantdirected
individual account plans, the
DOL issued a request for information.
Responding to that RFI, industry groups
urged the agency not to issue further
rules for brokerage windows, saying very
few plans offer them and, in plans that do
offer them, few participants use them.
Subsequent data and testimony from
providers and others have shown that
brokerage windows are used by only a
small percentage of eligible plan participants
and that brokerage window users
tend to be longer-tenured employees
having higher than average plan balances,
the ERISA Advisory Council report says.
The report also notes that the two
FABs did not deal with ERISA's fiduciary
standards, nor has the DOL supplied
guidance on this issue.
From these findings, the majority
of council members agreed that the cost
of disclosures outweighs the benefit
of disclosing the risks of brokerage
windows, including the lack of fiduciary
oversight or the possible lack of adequate
diversification.
The council has recommended,
however, that the DOL consider further
fact-finding related to " brokerage window
8 PLANSPONSOR.COM February - March 2022
only, " or BWO, plans-i.e., plans that have
no designated investment alternative and
in which brokerage accounts are the sole
investment option. The council expressed
concern that financially inexperienced
employees could be disadvantaged with a
suboptimal experience, as these types of
plans might have limited features available
to them compared with the features
available to participants in plans serviced
through institutional recordkeepers and
other plan service providers.
The council also expressed concern
that some BWO plans have no default
brokerage window provider, as this could
also discourage financially inexperienced
employees from participating in these
plans: They may lack the ability or comfort
level to select a brokerage provider to
begin participating.
" The council believes that, by focusing
its fact finding in the BWO market, the
department could obtain the necessary
data to determine whether any further
action is necessary, " the report says.
2nd Union Pension
Wins Financial Support
Signed into law a year ago March, the
American Rescue Plan Act included
$1.9 trillion in collective economic relief,
much of it targeted to addressing the
coronavirus pandemic. Along with other
provisions aimed at supporting the retirement
planning sector, the law allowed for
substantial relief payments to be targeted
at stressed multiemployer pension plans
sponsored by unions. Specifically, the law
allows multiemployer plans that are in
" critical and declining " status, as defined
by prior legislation, to get a lump sum of
money to make benefit payments for the
next 30 years, or through 2051.
This past December, the first of
these payments was approved by the
Pension Benefit Guaranty Corporation,
going to the Baldwin, New York-based
Local 138 Pension Plan, which covers
1,723 participants working in transportation.
The pension plan just this week
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PLANSPONSOR - February - March 2022

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