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The Resource for the Global Finance Profession

Impact of Dodd-Frank on Retirement Plans

  • By Judy Schub, CIEBA Managing Director
  • Published: 2010-09-23

President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010.  CIEBA, the voice of the AFP on employee benefit plan asset management and investment issues, was active in the effort to preserve the ability of retirement plans to invest in swaps and derivatives.  The following are swaps-related provisions of interest to retirement plans:

  • Swaps and Derivatives.  Pension plans were excluded from the definition of "Major Swap Participant" if they use swaps to control risk.  Fiduciary language that would have prohibited swaps dealers from entering into transactions with plans was dropped from the final version of the bill.  In addition, commercial end-users of swaps and derivatives will not have to clear all transactions if they are "using the swap to mitigate commercial risk."
  • Stable Value Contracts.  The new swaps provisions in Dodd-Frank will not have any immediate impact on stable value contracts.  The law calls for the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to study whether or not stable value contracts should be considered swaps.  The study is due 18 months after the date of enactment.  Following the study, the law gives the agencies authority to exempt stable value contracts from the swaps definition if it is in "the public interest" to do so.

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