INSIDER

DOL Proposes Default Investment Guidance
The U.S. Department of Labor (DOL) has proposed guidance concerning default investments in participant-directed defined contribution plans under ERISA section 404(c), as required by the Pension Protection Act of 2006. The guidance would protect plan fiduciaries if, in the absence of investment direction from the participant, the fiduciary invests the participant’s assets in a qualified default investment alternative (QDIA) and certain notice and other conditions are met. Plan fiduciaries would still have to prudently select and monitor any QDIAs under their plans. [November 2006]

Deflation — A Second Look
Deflation, a decline in the general level of prices, can be viewed as the result of too few buyers chasing too many goods and services. Last month's Watson Wyatt Insider included the article "Deflation, Financial Markets and Plan Sponsors," which described how deflation could affect pension trust funds and contribution or expense calculations. The basic message was that deflation — despite its generally negative effects — need not be catastrophic for plan sponsors. Careful planning, asset-smoothing techniques and investment discipline can help plan sponsors navigate troubled deflationary waters. [November 1998]

Deflation, Financial Markets and Plan Sponsors
With worldwide attention focused on the recent Asian market and currency crisis, U.S. investors are debating the possibility of our economic climate shifting from inflationary to deflationary. Our part of the current debate focuses on how mild deflationary influences would affect pension plan investments, plan liabilities, annual plan expense and annual cash funding requirements. [October 1998]