SURVEY SAYS: What Do You Think of the QDIA Regs?

This week I asked readers what they thought about the new, final regulations.

The most common response to this week’s survey (and yes, the extra day more than doubled the response rate) came from 28.7%  who said that they hadn’t really had a chance to get into them, but liked what they had picked up.   The overall response was, in fact, generally positive – but there were, of course, voices of “dissent.”  

Roughly 25% of this week’s respondents had apparently gotten deeper than that – and of this number 15% liked what they had read, while 10% said they still had some questions – and just 2% said they had some problems.   About 4.5% thought the DoL missed the boat by grandfathering stable value default investments already in place – but nearly twice that number (just short of 8% ) said they really appreciated that move.   Roughly one in 10 admitted they hadn’t really picked up on the new regulations, and the remaining respondents went for “other.”

Striking a Balance

The surest sign that the final regulations were adept at striking a balanced solution could perhaps be found in the conflicting opinions as to whether the stable value industry had won or lost:

Grandfathering the stable value investment for existing accounts does not comply with PPA as written, or with its intent.    It’s a cop-out.   Very disappointing.   I was actually hoping DOL would show have some backbone and make sure the final regulations complied with the intent of the law.   That’s their job.    I hope most investment advisors tell their clients to ignore the grandfather clause and invest default funds to provide for sustained growth.

It’s about time we get these regs and I am proud they stood up to the insurance agencies lobby

I think the DOL came to the “politically correct” solution, grandfathering in the past use of a stable value funds, but in reality, doing so is theoretically inconsistent with their approach going forward (and I’m happy that SVF’s aren’t a QDIA). Oh well. Who ever said the government needed to be consistent.

It’s interesting to see the Insurance lobby (traditionally very influential) lose on the stable value issue. They may be even more vulnerable when the upcoming fee and fee disclosure changes are made. Insurers have already changed some pricing – participants should benefit from the more reasonable margins that are being forced on to the insurance industry.

I understand that they want to encourage more aggressive investing, but I still don’t feel comfortable putting someone in a fund where they will incur losses without their permission. I don’t think this will be a popular piece of legislation with plan participants. I expect to hear alot of hollering when those that didn’t choose see losses on their quarterly statements.

I don’t understand this obsession with money market or stable value options as part of QDIA. If we live in that much fear of participant backlash in any declining market, maybe we should close the plan.

But this week’s Editor’s Choice goes to the reader who observed “112 pages???? I’ll wait for the summary by my favorite web site, hint, hint!”

In fact, we have provided a summary of the bill’s provisions – check out the Recommended Readings to the right here.   Also it may be worth noting that while the document containing the final regulations is a relatively readable 112 pages – the final regulations are found in the last 10 pages or so.   But I would recommend reading the whole thing – it’s a good, thoughtful explanation of much of the rationale behind the regulations – what they were asked to consider, what they chose to consider/change – and not.  

Thanks to everyone who participated in our survey!

Grandfathering the stable value investment for existing accounts does not comply with PPA as written, or with its intent.   It's a cop-out.   Very disappointing.   I was actually hoping DOL would show have some backbone and make sure the final regulations complied with the intent of the law.   That's their job.    I hope most investment advisors tell their clients to ignore the grandfather clause and invest default funds to provide for sustained growth.

F plus it's about time we get these regs and I am proud they stood up to the insurance agencies lobby

(b) haven't had a chance to really study them yet, but it looks pretty good at first blush

just reading   the regs now

Stable value funds got more then what they deserved- the grandfather and the 120 safe harbor default   HOWEVER, I spoke with FIDO yesterday and they can't handle a temporary 120 day plan   default and then later default to   the real default- an   aged based target fund.  

Still hoping we can auto enroll   as of DAY 1 and not have to wait 30 days.    what you wrote seems to imply that given the concurrent notice provision

F, of course.   Otherwise all plan sponsors who used a money market or guaranteed income fund as a default investment all these years MIGHT see a little trouble.