Discussant: Richard Hinz, Department of Labor
Pamela Perun stated flat-out that ERISA is broken and needs to be fixed. She said the basic problem is that ERISA took one regulatory approach in 1974 and DC plans took another in 1992. However, the problem was not 401(k), but 404(c) regulations. The 404(c) regulations are a labor law statute in ERISA applicable to DC plans. They apply when participants decide to invest their own accounts, and they are an important exemption from ERISA’s fiduciary responsibilities. She presented several legal cases that purported to detail self-dealing on the part of plan sponsors, and indicated that these cases represented a large potential liability to all sponsors of 404(c) plans.
During the discussion Peter Weinberg of TIAA-CREF, taking note of the allegations levied against the plan sponsors, asked if perhaps there was some liability involved on the part of these plan sponsors, irrespective of 404(c).
