ICI Raises Additional Concerns over DOL Proposed Amendments to "QPAM" Class Exemption

The Investment Company Institute ("ICI") reiterated "significant concerns" after the DOL reopened the comment period on the Employee Benefits Security Administration’s proposed amendments to Prohibited Transaction Class Exemption 84-14 (the Qualified Professional Asset Manager or "QPAM" Exemption).

As previously covered, the QPAM Exemption allows regulated entities, such as registered investment advisers, banks, savings and loan associations and insurance companies that meet the criteria set forth in the exemption to engage in certain activities related to ERISA plan assets that would otherwise be prohibited transactions. The proposed amendments include numerous interpretive and logistical challenges and, if adopted, would substantially expand the conditions for compliance with the QPAM Exemption, and may have a drastic impact on the management of plan assets by asset managers. (See further analysis here.)

In a comment letter, ICI warned that if adopted, the provisions of the amendments would (i) hurt routine plan transactions, (ii) minimize available investment opportunities and (iii) increase retirement plan costs. Due to the "extensive" unforeseen consequences of the proposed amendments, ICI urged the DOL to withdraw its proposal and conduct a comprehensive study on whether any amendments are necessary.

ICI argued that if finalized, the proposal would:

• make the QPAM Exemption costlier and more difficult to use, without any indication that the exemption has not been working as intended;
• undermine the discretion of plan fiduciaries who ICI said are the "best positioned" to determine the interests of a plan; and
• create "structural and practical challenges" to how collective investment trusts ("CITs") have "successfully operated for decade" by raising costs and reducing investment returns for plan participants and beneficiaries of CITs.