SWACCA’s public policy team is pleased that another multi-year advocacy campaign has ended in success. Since the summer of 2020, SWACCA has been at the forefront of an effort with its allies in the Construction Employers of America and its union partners to reverse regulations that negatively altered the analysis trustees of ERISA plans must use when assessing plan investments. On Nov. 22, the U.S. Department of Labor’s Employee Benefits Security Administration released on its website, in advance of publication in the Federal Register, its final rule on Prudence and Loyalty in Selection Plan Investments and Exercising Shareholder Rights, returning the regulations to the prior standard SWACCA and its allies urged while providing important clarification sought to protect plan trustees.
The final rule rescinds regulations from the prior Administration creating a new “economically indistinguishable” standard for evaluating competing investments. This novel standard made it harder and riskier for fiduciaries of multiemployer plans to invest in projects that create union jobs and generate contributions to the plan. As SWACCA requested, the final rule returns to the old “economically equivalent” tiebreaker standard for selecting between investments that offer equivalent risks and returns. Moreover, the final rule affirms the position SWACCA and CEA advocated throughout their two-year advocacy campaign, that the creation of union jobs and contributions to the plan are collateral benefits trustees may use to select between two equivalent investments.