GOP Senators Ask for Safe Harbor for Alternative Investments in DC Plans

A cadre of nine Republican senators wrote to the Department of Labor urging the agency to implement a regulatory safe harbor.

Their request follows President Donald Trump’s August 7 executive order promoting greater inclusion of alternative investments in defined contribution plans’ investment menus.

The letter, addressed to Labor Secretary Lori Chavez-DeRemer, stated that implementing a safe harbor “will maximize the order’s effectiveness and ensure industry has the certainty needed to deliver on behalf of American retirees.”

A regulatory safe harbor is a legal provision that would offer plan sponsors protection from litigation if they follow the guidance it provides. A safe harbor is one regulatory action the DOL could take following Trump’s executive order that requests the DOL, and other agencies, provide regulatory guidance to ease the burden on plan sponsors that wish to offer the investments in their retirement plans.

Several industry insiders previously told PLANADVISER that a safe harbor would be significant, since most plan sponsors eschew offering alternatives in their plans, at least in part due to litigation concerns.

In the senators’ letter, they too noted the safe harbor could address plan sponsors’ litigation concerns.

“We request that the process be done expeditiously through a formal rulemaking that establishes essential critical safe harbor protections,” the senators wrote. “Your success will enable highly skilled plan fiduciaries to offer prudent allocations to alternatives without fear of frivolous lawsuits, aligning private-sector workers’ opportunities with those of institutional investors.”

The August 22 letter was signed by Sens. Steve Daines, R-Montana; Markwayne Mullin, R-Oklahoma; Jim Banks, R-Indiana; Bernie Moreno, R-Ohio; Cynthia Lummis, R-Wyoming; Bill Hagerty, R-Tennessee; Katie Britt, R-Alabama; Eric Schmitt, R-Missouri and Bill Cassidy, R-Louisiana.