Since ERISA’s enactment in the 1970s, the structured finance market has experienced significant development – and more than the drafters likely could have ever envisioned.


Case Challenges Long-Standing ERISA Debt Characterization – and Claims Trustees are Fiduciaries

The plantiffs in Powell v Ocwen are attempting to challenge a deal sponsor’s debt characterization of RMBS investment grade securities for ERISA purposes as well as claiming the Trustees are fiduciaries under ERISA – a ruling in their favor would lead to significant negative impact to the market and therefore the underlying consumers and businesses our market supports.

Please see here for case summary.

Many of our industry’s institutional investors act as investment managers for pension plans. As such, they are subject to the Employee Retirement Income Security Act (ERISA), a federal law that sets the minimum standards for retirement plans in private industry, including imposing specific duties these investment managers must meet. Our investor community takes these responsibilities with the utmost seriousness and attention. Therefore, having a clear understanding of ERISA rules is paramount.

“In FY 2013, ERISA encompassed roughly 684,000 retirement plans, 2.4 million health plans and 2.4 million additional welfare benefit plans. These plans cover about 141 million workers and beneficiaries, and include more than $7.6 trillion in assets. About 54 percent of America’s workers earn retirement benefits on the job, and 59 percent earn health benefits.” – U.S. Department of Labor

Since ERISA’s enactment in the 1970s, the structured finance market has experienced significant development, more than the drafters likely could have ever envisioned.  The Department of Labor has addressed many of these developments through a patchwork of amendments and exemptions; however, there remain some ambiguities among various provisions and exemptions as well as unforeseen impediments that in certain circumstances have the potential to limit otherwise suitable investment opportunities for pension plan clients.

Accordingly, the Association formed an ERISA Task Force as a forum to discuss issues relating to ERISA regulations with a current focus on:

  • Reviewing ERISA provisions as they relate to structured finance and how the industry is interpreting and implementing these rules and, if deemed necessary, engaging with the Department of Labor for further guidance
  • Standardizing, where appropriate, ERISA disclosure provided in securitization offering documents


Jennifer Wolfe

Director, ABS and Investor Policy