The PWBA will allow actuarial consulting firms and other service providers to ask plan sponsors to sign off on clauses limiting the actuaries’ liability. In an advisory opinion requested by the $6.5 billion Central Pension Fund of the International Union of Operating Engineers and Participating Employers, Washington, the Labor Department said it does not believe most indemnification limitations are imprudent or unreasonable under federal pension law. However, "provisions that purport to apply to fraud or willful misconduct by the service provider are void as against public policy and that it would not be prudent or reasonable to agree to such provisions,” Louis Campagna, chief of the division of fiduciary interpretations, wrote to the Central Pension Fund.
The Central Pension Fund requested the advisory opinion earlier this year, after its former actuary, Watson Wyatt Worldwide, wanted its clients to limit its liability to $250,000, or one year’s fees. Bolton Offutt Donovan has since replaced Watson Wyatt as the plan’s actuary.
Michael R. Fanning, pension fund CEO, could not be reached for comment.
