Panelist Gives PPA Good Review

Kalamarides said he also expects the U.S. Department of Labor (DOL) to issue a safe harbor ruling modifying the DOL 96-1 opinion, which lets plan sponsors choose a guaranteed minimum withdrawal benefit solution to be a qualified default distribution alternative for 401(k) plans.

This, he said, would improve on current regulations, which allow only payments of cash as a qualified default distribution alternative. He said pre-retirees may be better

served in coming years by placing retirement savings in other vehicles.

Kalamarides also is hoping Congress will create an automatic individual retirement account (IRA) program, to give small businesses a simple, low-cost alternative to offering a 401(k) plan.

"The idea is to allow small employers to pool their purchasing power and use a model plan issued by IRS," he said. "This would dramatically reduce costs for the small employer, mitigate fiduciary risk and dramatically reduce administrative costs."

Kalamarides said the outlook for "business practices" governing advisors and plans sponsors is mixed.

Prudential supports an enhanced fiduciary standard and compensation disclosure requirements for insurance and financial professionals, but to be effective, any federal- and state-mandated business practices must be "clear, concise and actionable," Kalamarides said.

"We're concerned that proposed regulations on the technical side may not be as clear, concise or actionable as we would like," he said. "They end up increasing costs and, at times, cause confusion. Much is good about the proposed regulations. But there is more work to be done."

Turning to pensions, Kalamarides said state and municipal governments face a "special challenge" in restoring to financial health their multi-employer pension plans, many of which are significantly underfunded. Congressional action to aid such plans should be forthcoming in the year ahead, he said.