Plan Sponsor on MMF Reforms
Plan Sponsor magazine writes, "Regulatory Change Brewing Beyond Fiduciary Rule." It says, "Beyond its own focus on fiduciary advice issues, the Securities and Exchange Commission (SEC) is in the process of implementing major money market fund reform provided for under rulemaking adopted in July 2014. The SEC is concerned the money market fund reforms could catch some plan sponsors and advisers unawares, so they are more aggressively warning about the changes qualified retirement plans will have to make to accommodate the reforms. Chances are a given plan sponsor will be impacted by the money market reforms, with the PLANSPONSOR Defined Contribution Survey showing upwards of two-thirds of plans currently offer money market funds. While the SEC has said its rules will allow most plans to remain in retail money market funds, some are concerned the reforms could make this untenable from a fiduciary perspective, given the emergence of liquidity gates and fees." It continues, "The widespread use of money market funds among retirement plans and other institutional investors means industry providers should be paying attention, and should be gearing up to help guide plan sponsors and their own sales representatives through the 2016 implementation. Two business leaders at Voya Financial tell PLANADVISER their firm is proactively preparing for the money market changes. According to Susan Viston, client portfolio manager, and Paula Smith, senior vice president for investment products-only business, Voya is actively talking with plan sponsors about what the reforms mean. "Probably half of them are still trying to decide what their next move is going to be, based on the money market reforms," the pair explains. "We foresee some people just staying put, but others are eyeing stable value more closely. Especially in the mid- to large-plan space, we're seeing more interest in stable value again. It's something service providers are paying increasing attention to." Months ago, the concerned industry groups warned that, despite a relatively long window provided for the reforms to take effect, as we near the fall of 2016, huge numbers of plan sponsors will all at once turn to reexamining their money market options in light of their fiduciary duty to plans and participants. The industry groups say they worry plan sponsors will feel compelled to replace their retail money market funds with government money market funds, which will not have liquidity fees or redemption gates. Again, the SEC has highlighted carve-outs in its rulemaking to prevent this outcome, but providers and fiduciary sponsors are being cautious."
