EBSA Press Release: Labor Department Reduces Retriections on Pension Investments [07/31/1996]

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The U.S. Department of Labor today announced rules streamlining the process under which employee benefit plans subject to the Employee Retirement Income Security Act seek approval for a wide range of investments and business transactions. These rules would apply to transactions that are normally prohibited under federal pension law but pose little or no risk to the pension plans.

Under the new rules, plans and the business community may be able to proceed, in as little as 78 days of a request to the Labor Department, to engage in a transaction which is substantially similar to two individual exemptions previously granted by the department.

The department proposed the class exemption last November as part of the Administration's commitment under reinvention and pension simplification to reduce burdensome rules. The exemption also creates greater efficiency for the department by freeing resources to examine more complex cases involving waivers under the law.

Olena Berg, assistant secretary for the Pension and Welfare Benefits Administration said, "Plans and the business community would have greater opportunities to conduct billions of dollars in transactions each year.

"Our action reduces delays by expediting approval for those transactions posing little risk to plans, which can translate into cost savings and reduced paperwork. The exemption retains safeguards to protect plans and their assets from misuse."

In order for a plan to qualify for the class exemption, it must demonstrate to the department that the transaction:

• is substantially similar to those described in two prior individual exemption s granted; and
• presents little, if any, opportunity for abuse or risk of loss to a plan's participants and beneficiaries.

The current exemption process generally can take four to six months and requires the publication of a formal notice in the Federal Register.

The final exemption is scheduled to be published in the July 31 Federal Register.