Fisher Investments has signaled its strong support for Pooled Employer Plans (PEPs) in a letter to the Department of Labor (DOL), but cautioned that regulatory guidance for these plans should be crafted carefully to avoid inadvertent or counterproductive limitations on options available to plan participants.
Camas, Wash.-based Fisher Investments, one of the world’s largest fee-only investment advisors with over $125 billionin assets, and also an ERISA 3(38) Investment Manager, expressed its views in response to the DOL’s Employee Benefits Security Administration’s (EBSA) request for comments on its planned regulatory guidance on PEPs. The letter was submitted July 17, the last scheduled day of the 30-day comment period.
PEPs, which were established as part of the 2019 SECURE Act, will allow unrelated and smaller employers that don’t share a common industry or location to participate in a single, shared 401k plan so they can take advantage of their collective purchasing power to provide retirement plans to their employees.
In its response, the firm asserts that additional exemptions and limitations on products and services do not need to be added to PEP plan rulemaking.
The comment letter focused on two key points:
- A single entity can serve as the pooled plan provider and the investment manager, without raising the need for additional prohibited transaction relief;
- Not all proprietary investment products raise prohibited transactions.
PEPs empower plan administrators to act as ERISA fiduciaries on behalf of participating employers. Similar to Multiple Employer Plans (MEPs), the ultimate goal of this new approach will be to provide an efficient retirement alternative to small, independent employers.
Fisher Investments’ letter covers issues around plan structure and investment options including:
- How the firm would structure PEPs to maximize retirement savings while addressing the varied needs of plan participants with different levels of sophistication.
- Potential conflicts of interest that may arise in working with PEPs and how these can be avoided.
- Appropriate investment products that may be included in plans.
“Pooled Employer Plans present a major opportunity to increase the retirement security of working Americans by providing them access to top quality investments. In creating this option, the Department of Labor and EBSA have struck a blow in addressing the current retirement savings crisis,” said Nathan Fisher, Founder and Senior Executive Vice President of Fisher Investments 401(k) Solutions (and author of the comment letter). “With the correct approach, these plans can provide a vital new retirement savings vehicle for a significant number of Americans.”
The comment letter can be read in its entirety at this link. All comments and hearing requests are available to the public at http://www.regulations.gov and http://www.dol.gov/agencies/ebsa.
Titled, “Prohibited Transactions involving Pooled Employer Plans under the SECURE Act and Other Multiple Employer Plans,” EBSA’s request for information sought information on the possible parties, business models, conflicts of interest and prohibited transactions that might exist in connection with PEPs that respondents anticipate will be involved in the formation and ongoing operation of PEPs.
The document also requests information on similar issues involving multiple employer plans (MEPs) sponsored by employer groups or associations or professional employer organizations.
Acting Assistant Secretary of Labor for the EBSA Jeanne Wilson said the comments will help the agency evaluate the need for a proposal on a new exemption.