The U.S. Department of Labor (“DOL”) has recently extended the relief previously granted to five financial institutions which allows these banks to continue to rely on the QPAM exemption (Prohibited Transaction Exemption 84-14). The QPAM exemption permits ERISA plans and comingled funds to engage in transactions with “parties in interest” to those ERISA clients without running afoul of ERISA’s prohibited transaction rules, provided that the ERISA plan or fund is managed by a qualified professional asset manager (“QPAM”) and certain other conditions are satisfied. Continue Reading DOL Extends QPAM Relief to Five Financial Institutions
Although retirement plans and schemes are generally jurisdiction specific creatures, the governance of the retirement plans and schemes of multinational companies is very much a global issue. Retirement funds, whether defined contribution plans or defined benefit plans, are essentially large pots of money (frequently in the billions of dollars) located in jurisdictions around the world. These arrangements tend to be heavily regulated and pose numerous risks to the sponsor, including legal and regulatory compliance gaps, participant lawsuits, government investigations, and embezzlement of trust funds. Of further concern are plan funding obligations and material risk to the corporate balance sheet (e.g., the effect of unfunded defined benefit plan liabilities on financial statements and the management of plan assets and liability for possible losses.) At the same time, the arrangements may be tied to various corporate/HR goals, with tensions between a company’s desire to harmonize global benefits and/or achieve cost control objectives and the reality of local labor markets and legal requirements.
Global and multinational employers may have a local committee or officer in each country responsible for that country’s retirement arrangements, but the degree to which such local personnel operate independently, and the amount of reporting to, and oversight by, a committee at the parent level varies. Not infrequently, the allocation of responsibility between parent and subsidiary committees does not fully align with the goals and risk management objectives of the company as a whole.
We are finding that many employers are in the process of assessing (or reassessing) their governance and risk management structures for their retirement programs on a global basis. Mayer Brown’s Global Guide to Retirement Plans & Schemes provides a brief overview of the laws relating to the regulation of retirement plans and schemes in 50 key countries. The guide was launched in 2017 with the hope that it will be a valuable starting point for multinational and global employers that are developing or updating governance and risk management structures for their retirement programs. While the guide is not a comprehensive discussion of the laws governing retirement programs in each applicable country, it summarizes the general contours of the country’s social security system and employer-sponsored broad-based plans/schemes, with an emphasis on those aspects of the regulatory structure that pose potentially significant liability/risk management issues for empl0yers. We hope that our clients and friends will find the guide useful.