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Pooled Employer Plans (“PEPs”): Putting a little PEP in a 401k retirement plan could help to protect your Portfolio Companies

Set against the backdrop of the continuing wave of ERISA litigation that is being brought against employers who sponsor retirement plans, Pooled Employer Plans (“PEPs”) are emerging in the US retirement plan marketplace as an alternative that may limit employers’ risk of retirement plan-related litigation. There have been over 220 ERISA class action suits filed in connection with retirement plans since 2018, and the top ten ERISA settlements for 2021 alone totaled $840 million in the aggregate. Since ERISA litigation is a serious and relevant concern, many plan sponsors, including private equity sponsors and their portfolio companies, would benefit from evaluating whether a PEP is a viable retirement plan solution for them.

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President Signs Memorandum Requiring Further Review of DOL Fiduciary Rule


Time to Read: 1 minutes Practices: ERISA

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On February 3, 2017, President Trump signed a presidential memorandum directing the U.S. Department of Labor (the “DOL”) to examine its new fiduciary rule. (For details on the fiduciary rule, see our prior Alert, and, for details on the related DOL-issued FAQs, see our prior Alert on the First FAQ and Alert on the Second FAQ.) Contrary to initial reports based on a leaked draft memorandum, the final memorandum does not delay the applicability date of the rule (April 10, 2017). However, following the signing of the memorandum, the acting U.S. Secretary of Labor issued a statement that the DOL will consider its legal options for delay. Ropes & Gray is continuing to monitor developments on the rule and its status.

The text of the presidential memorandum requires the DOL to examine the rule to determine whether it may adversely affect access to retirement information and financial advice, and, as part of that examination, to prepare an updated economic and legal analysis on the rule. This analysis is required to consider, among other things, (i) the potential harm to investors due to a reduction in access to certain products and information, (ii) whether the retirement services industry’s actions in preparation for the rule may adversely affect retirement investors or retirees and (iii) whether the rule is likely to increase litigation and the price to gain access to retirement services. If the DOL determines that the rule would result in any of these enumerated harms or otherwise be inconsistent with the goal of permitting retirement investors to make their own financial decisions to save for retirement and build the individual wealth necessary to afford typical lifetime expenses, then it is required to publish for notice and comment a proposed rule rescinding or revising the fiduciary rule.

For more information on the current status of the DOL’s fiduciary rule, please contact any member of Ropes & Gray’s ERISA practice group.

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