Compliance September 2, 2003

DoL Suggests QPAM Rule Changes

September 2, 2003 (PLANSPONSOR.com) - Federal Labor Department regulators have proposed to narrow restrictions on transactions with parties in interest who can invest a plan's assets in a pooled fund managed by a qualified professional asset manager (QPAM).
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>According to an announcement from the US Department of Labor’s Employee Benefits Security Administration (EBSA), the change would allow plans to do transactions with a larger group of related parties. The proposed amendments would change Prohibited Transaction Exemption (PTE) 84-14 to ease compliance difficulties in a move prompted by the financial services industry concerns that recent consolidation now makes it harder to comply with the existing exemption for monitoring corporate affiliates.

>PTE 84-14 currently features a general exemption and three limited exemptions that allow plans whose assets are managed by a QPAM to engage in a variety of transactions otherwise prohibited by ERISA, provided the safeguards of the exemption are met.   QPAMs can be banks, insurance companies, savings and loans and investment advisors who are regulated by state or federal laws and meet certain financial standards.   The exemption is designed to ensure that the QPAM maintains independence from other parties to transactions involving the assets of plans under its management, EBSA said.   The class exemption eliminates the need to obtain an individual exemption on a case-by-case basis.

“The updated exemption will increase the investment opportunities available to plans, allow greater efficiencies and lower costs,” said Ann Combs, Assistant Secretary of EBSA. The proposed amendments to PTE 84-14 will be published in the Federal Register on September 3, 2003.  

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