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Rating:The ICI Strikes Back at Stable Value Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, June 04, 2007

The ICI Strikes Back at Stable Value

by: Neil Anderson, Managing Editor

Now that the Office of Management Budget has been pulled into the debate over qualified default investment alternatives in retirement plans, the Investment Company Institute wants the office on its side. After the American Council of Life Insurers wrote to the OMB several weeks ago, arguing that the exclusion of stable value investment options from the Department of Labor's proposed QDIA safe harbor list (for defined contribution retirement plans like 401(k)s) is "inconsistent with the principles of the Executive Order", the mutual fund industry trade group sent its own nine-page letter to OMB defending the DoL's choice.

The safe harbor rules are intended to give some legal shelter and comfort to employers who want to choose their employees' 401(k) investments for them, so long as those investments fit into one of the types shielded in the rules. The DoL's initial proposal, released in September, protects choices like target date retirement funds, balanced funds and managed accounts.

The ICI's letter -- penned by Brian Reid, the ICI's chief economist, and Elena Barone, assistant counsel for pension regulation -- praises the DoL for its use of its "expertise to develop a reasoned and substantiated regulatory analysis."

"The Department's proposed safe harbor will allow employers to act free of the threat of litigation in making default investment choices that are appropriate for long-term investing," the letter states, "and provide great likelihood of ensuring retirement income security."

Initially due out in February of this year, the final QDIA safe harbor rules are now rumored to have a release target of late summer. 

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