June 15, 2010
For additional information:
Deanna Johnson

Council conference call to brief media on financial services reform bill impact on swaps in retirement plans

WHO: Lynn Dudley, senior vice president, policy
Ken Porter, senior vice president, international benefits & chief actuary
Diann Howland, vice president, legislative affairs
Jan Jacobson, senior counsel, retirement policy
Kent Mason, partner, Davis & Harman LLP

Congress is preparing for the conference to reconcile differences between the House- and Senate-passed versions of financial services reform legislation. Several key issues affecting retirement plans remain unsettled. The Senate passed the Restoring American Financial Stability Act (S. 3217) on May 20, 2010, and the House passed the American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213) on December 9, 2009.

Along with over 150 companies and organizations, the Council sent a letter on June 11 to members of both the US House of Representatives and the Senate outlining critical concerns for the plan sponsor community regarding the financial services reform legislation that the conference committee will merge.

For employer plan sponsors, there are three key issues in these bills. One provision in the Senate legislation would require "swap" dealers to owe a fiduciary duty to a retirement plan when entering into an arrangement with that plan. This would create conflicting fiduciary duties, so that the dealer would have one fiduciary duty to its own shareholders and a second fiduciary duty to act in favor of the plan and against its own shareholders in negotiating the price and terms of a swap. Both the House and Senate legislation raise serious concerns about the application of the legislation to stable value funds due to their likely inclusion in the definition of swaps. This would subject such funds to many additional new requirements and could preclude their use in plans. Stable value funds are currently a very common form of 401(k) plan investment. Finally, the House bill treats pension plans as "major swap participants", thus subjecting these plans to new costly and burdensome requirements. Moreover, the obligations applicable to "major swap participants" are aimed at organizations that create risk; plans use swaps to manage risk, not to create it.

WHEN: Friday, June 18, 10:00 a.m. to 11:00 a.m. ET. This briefing is by conference call only.
HOW: To attend the conference call, you must RSVP.
CONTACT: Deanna Johnson, Council director, membership, at 202-289-6700.

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.