Morningstar Investment Management and Plan Administrators Inc., a retirement plan administrator and record keeper, have joined forces to offer a pooled employer plan that will provide ESG investments, the companies announced in a news release Thursday.
The new pooled employer plan is expected to launch in early 2022 and is being positioned as the nation's first PEP to center on ESG.
"Sustainability is the new face of long-term investing, and we believe every company should be considering ESG risk when designing a retirement plan for their employees," said Brock Johnson, president of global retirement and workplace solutions at Morningstar, in the release.
Plan Administrators will oversee the plan as the pooled plan provider, while Morningstar will select and manage the investment lineup for the plan as the 3(38) investment manager.
The PEP's final investment lineup has not yet been determined but will "comprise ESG investments that meet Morningstar's rigorous investment selection criteria for retirement investments, plus additional assessments for environmental, social and governance factors," Morningstar said in an FAQ posted on its website.
The lineup will also include a custom target-date model built and managed by Morningstar using the investments selected for the plan's lineup, according to the FAQ.
The PEP's objective is "to create as close to a complete ESG lineup as possible," the news release said.
The announcement follows a proposal from the Department of Labor on Tuesday to explicitly permit plan fiduciaries to consider climate change and other ESG factors when selecting investments for retirement plans.
Pooled employer plans are a new type of retirement plan that started rolling out on Jan. 1, thanks to the SECURE Act, which facilitated their creation. The new plans allow employers in unrelated businesses to band together to offer a single retirement plan. They are being touted as a way for plan sponsors to reduce their fiduciary and administrative duties and reduce plan costs through greater economies of scale.
To date, 78 pooled plan providers have registered with the Labor Department, according to the agency's registration database.