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Report on Stable Value Funds and Retirement Security in the Current Economic Conditions

This report was produced by the Advisory Council on Employee Welfare and Pension Benefit Plans, usually referred to as the ERISA Advisory Council (the Council). This report examines Stable Value Funds and Retirement Security in the Current Economic Conditions. The ERISA Advisory Council was created by ERISA to provide advice to the Secretary of Labor. The contents of this report do not represent the position of the Department of Labor (DOL).

Executive Summary

The Council studied Stable Value Funds and Retirement Security in the Current Economic Conditions. The Council’s purpose in studying stable value funds and other stable value investment products (Stable Value Funds), was to determine whether the Department should provide (i) requirements or guidelines to retirement plan service providers related to the design or marketing of Stable Value Fund investments; (ii) requirements or guidelines to plan sponsors and fiduciaries for selecting and monitoring Stable Value Funds; and (iii) information to plan participants to assist them in making informed investment decisions regarding Stable Value Fund investments in participant-directed plans.

The Council received testimony from ten (10) witnesses on July 22, 2009 and from eight (8) witnesses on September 16, 2009. These witnesses represented a wide variety of interested parties and viewpoints, including members of the stable value industry, such as Stable Value Fund managers and product providers, independent investment advisors, retirement plan consultants, employee benefits providers, employee benefits attorneys, and non-profit associations. The Council submits the following recommendations to the Secretary of Labor for consideration:

Recommendation 1: The Department should prepare and make available informal information, such as FAQs, best practices or other general guidance, targeted to plan sponsors and plan fiduciaries that would assist them in discharging their fiduciary duties when selecting, monitoring and making available plan investments in stable value products.

Recommendation 2: The Department should prepare and make available simple and concise educational materials targeted to plan participants that would assist them in the potential investment of their participant-directed investment account in stable value products.

Respectfully submitted,

*Patricia Brambley, Issue Chair

*Theresa Atanasio, Issue Vice-Chair

Elizabeth Dill, Council Chair

Marc LeBlanc, Council Vice-Chair