In Revenue Ruling 2022-13, the IRS answers the question: “If a multiemployer defined benefit pension plan that has received special financial assistance (SFA) from the Pension Benefit Guaranty Corporation (PBGC) is merged into a multiemployer defined benefit pension plan that has not received SFA, and the plan that has not received SFA is designated as the ongoing plan after the merger, is the ongoing plan deemed to be in critical status under section 432(b)(7) of the Internal Revenue Code (Code) solely as a result of the merger?”
The question is important because DB plans that are in critical status are required to enter into a rehabilitation plan and are subject to certain benefit restrictions. The IRS says the plan designated as the ongoing plan after a merger with a plan that has received SFA is not deemed to be in critical status.
The IRS notes, however, that following the merger, the ongoing plan must comply with the restrictions and conditions that applied to the plan that received SFA. For example, the ongoing plan will maintain a separate account for the SFA funds received and invest the assets of that separate account in permissible investments in accordance with the PBGC’s final rule.
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UBS Launches U.S. Version of Climate Aware Equity Index
UBS announced the launch of the U.S. version of the UBS Climate Aware Equity Index, which is a rules-based strategy that aims to provide investment exposure to the long-term theme of transitioning to a low-carbon and climate-resilient economy.
The index aims to serve the increasing demand for investment and retirement products that not only help investors achieve their investment goals but also help mitigate climate-related risks in their portfolios and capture environmental objectives within the investment philosophy.
Featured by Global Atlantic in a registered index-linked annuity, the UBS Climate Aware Equity Index is pioneering climate-focused indices in the U.S. RILA market. The index includes equity securities of large and midsize U.S. companies, while tilting the allocation toward companies that are expected to be successful in a low-carbon economy.
The index applies a systematic, rules-based approach to select and weight Index constituents based on climate scores. Current and forward-looking data is used to assess a company’s carbon footprint and gauge its forward-looking carbon emissions profile. UBS Climate Aware Equity Index scoring aims to consider key risks and opportunities related to climate change using six climate scores—carbon emission, coal energy, fossil fuel reserves, renewable energy, emissions trajectories and severe weather events. The index is maintained by a third-party benchmark administrator and uses ESG scoring information provided by a recognized market data provider.
“We are happy to offer retirement savers with a unique access to a tried and true investment strategy and hope this can help Global Atlantic clients build a retirement portfolio that is both well performing and climate conscious,” says Ghali El Boukfaoui, head of insurance solutions at UBS Investment Bank.
“Registered index-linked annuities are the fastest growing category of retirement products,” says Rob Arena, co-president and head of individual markets at Global Atlantic. “The inclusion of climate-focused index options within RILAs can be a meaningful way for environmentally-conscious clients to link their savings strategy with sustainability principles and values.”
Vanguard Makes Global Positive Impact Stock Fund Available
Vanguard announced that the Vanguard Baillie Gifford Global Positive Impact Stock Fund is available for investment. The fund consists of a global equity portfolio with the potential to outperform the broad market through active management and contribute positively to solving social and environmental challenges.
Vanguard introduced the fund via a tax-free reorganization of the Baillie Gifford Positive Change Equities Fund. The new Vanguard fund will continue to rely on Baillie Gifford’s expertise in fundamental equity research and impact analysis, as well as the firm’s framework for identifying high-quality growth companies that are driving solutions to global issues.
“We’ve taken a thoughtful and intentional approach to introducing ESG funds that help investors meet their long-term financial goals while also addressing their ESG investing preferences,” says Dan Reyes, head of Vanguard Portfolio Review Department. “We believe Baillie Gifford’s expertise positions them to build a portfolio with the potential to deliver excess return and positive impact for those investors seeking both.”
Vanguard says it believes that an active approach to impact investing enables skilled managers to better navigate the complexities of identifying companies driving positive change to build a portfolio with the potential to deliver on outperformance and impact objectives. The fund’s global mandate provides managers with the broadest opportunity set to identify companies that meet these objectives.
Vanguard selected Baillie Gifford for their differentiated approach to impact investing and long-term success in active management.
The Vanguard Baillie Gifford Global Positive Impact Stock Fund maintains the investment objectives and portfolio management team of its predecessor fund, ensuring consistency for shareholders. Baillie Gifford will also continue to produce an annual impact report using bottom-up research that complements its investment analysis. The fund has an investment minimum of $3,000 and expense ratio of 0.59%, compared with the average expense ratio of 1.26% for funds in its peer category.
UBS Launches U.S. Version of Climate Aware Equity Index