Products January 3, 2008

New Mutual Funds Utilize Specialized Strategies

Jackson National Life Insurance Company has added two new portfolios to the existing lineup of mutual funds available to advisers through Jackson National Life Distributors LLC.
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Jackson Funds offer seven distinct strategies, designed to address the diversification and asset growth potential needs of investors in the retirement planning process, a company announcement said. The new portfolios include the Jackson Perspective VIP Fund and the Jackson Perspective S&P 4 Fund.

The Jackson Perspective VIP Fund is a total return strategy that invests in six separate specialized strategies, including:

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  • The Dow Core 5 Strategy,
  • The European 20 Strategy,
  • The Nasdaq 25 Strategy,
  • The S&P 24 Strategy,
  • The Select Small-Cap Strategy, and
  • The Value Line 30 Strategy.

The Jackson Perspective S&P 4 Fund is a capital appreciation strategy that is designed to invest in equal amounts of four separate strategies, each of which is comprised of selected common stocks within the S&P 500 Index including:

  • S&P Competitive Advantage Strategy,
  • S&P Dividend Growth & Income Strategy,
  • S&P Intrinsic Value Strategy, and
  • S&P Total Yield Strategy.

To learn more about the Jackson Funds, independent advisers can call 1.800.711.5653, financial institutions can 1.800.777.7900 ext. 8195, and regional broker/dealer firms should call 1.800.340.5653 ext. 8195. Additional information can also be found at www.jnl.com.

Compliance January 3, 2008

Use of Plan Assets for Non-Plan Related Political Issues Violates ERISA

The Department of Labor’s Employee Benefit Security Administration (EBSA) has issued an advisory opinion about plan fiduciaries using plan assets to further policy or political issues through proxy resolutions.
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The opinion says that it is the DoL’s view that the use of pension plan assets by plan fiduciaries to further policy or political issues through proxy resolutions that have no connection to enhancing the value of the plan’s investment in a corporation would violate the Employee Retirement Income Security Act (ERISA).

In its recent advisory opinion, the administration expressed that plan fiduciaries risk violating the “acting for the exclusive purpose of plan participants and beneficiaries’ rule of ERISA when they exercise their fiduciary authority in an attempt to further legislative, regulatory, or public policy issues through the proxy process when there is no clear economic benefit to the plan. In such cases, EBSA said, it would expect fiduciaries to be able to demonstrate in enforcement actions their compliance with the requirements of ERISA.

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“As the Department has indicated in other contexts, plan fiduciaries may not increase expenses, sacrifice investment returns, or reduce the security of plan benefits to support or promote goals not directly related to the plan,” the administration said in the document.

The EBSA pointed out that the advisory opinion further clarifies Interpretive Bulletin 94-2 in which the department set forth its view that the fiduciary duties required by ERISA to act with prudence and for the sole interest of the participant generally dictate that, in voting proxies, the fiduciary must only consider factors that affect the value of the plan’s investment and not unrelated objectives. ERISA also requires that fiduciaries act for the exclusive purpose of paying benefits and defraying reasonable administrative expenses, the EBSA said.

The previous bulletin provides that an investment policy that contemplates activities intended to monitor or influence the management of a corporation in which a plan owns shares complies with a fiduciary’s obligations under ERISA if the fiduciary concludes that there is a reasonable expectation that such activities will enhance the value of the plan’s investment in the corporation sufficient to outweigh the costs involved. Interpretive Bulletin 94-2 makes it clear that plan fiduciaries must first take into account the cost of such action and the role of the investment in the plan’s portfolio, the EBSA stated in its opinion.

EBSA Advisory Opinion 2007-07A can be found here.

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