ERISA Advisory Council is taking a pass on a proposal that the Labor Department approve the use of stable value funds as a qualified default investment alternative in employee-directed defined contribution plans.
The proposal to recommend use of stable value as a QDIA was included in a comprehensive review of the investment options considered by the council last year.
“On balance, after consideration of all the testimony and based on the professional experience of council members and what they believe to be in the best interests of achieving retirement security for American workers, the council has decided not to make any recommendation to the secretary (of Labor) with respect to reconsideration of its decision not to include stable value funds as a QDIA,” the council said in a report issued today.
The council recommended that the Labor Department provide guidance on stable value funds to both plan sponsors and plan participants. Testimony the council heard in two days of hearings earlier this year supports the DOL “directly or indirectly” encouraging disclosure of critical information to plan sponsors, such as administrative costs and fees, the council report said.
“This is an important factor in determining the efficiency and prudence of any plan investment,” the report said.
“There was … a substantial consensus amongst witnesses that it would be helpful if the Department (of Labor) prepared some general informational material targeted to plan participants that highlights some of the basic material features of stable value funds,” the report also said.