The Labor Department today confirmed that qualified professional asset managers must be independent of plan sponsors when sponsors hire them to work with affiliated organizations otherwise banned under federal pension law. Until the Labor Department proposed the changes to the exemption in September 2003, sponsors had widely interpreted the 1984 rule to mean financial services firms could manage their own pension plans. But because the Labor Department's new rule interprets "independent" more strictly than before, the regulator is proposing new safeguards that would allow in-house money managers to manage their own pension plans. The proposed safeguards will be published in Tuesday's Federal Register, and open for a 45-day public comment period.
The final rule also requires a "qualified" independent investment adviser to have $1 million in equity capital, up from $750,000, to qualify as a QPAM, and $85 million in total assets under management, up from $50 million. The Labor Department is proposing giving more time for existing qualified professional asset managers to reach the new capital standards.