Compliance August 20, 2020

DOL NPRM Addresses PEP Plan Provider Registrations

The SECURE Act allows pooled plan providers to start operating pooled employer plans beginning on January 1, 2021, but providers must register before operations can begin.

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The U.S. Department of Labor (DOL) has announced a Notice of Proposed Rulemaking (NPRM) that seeks to implement the registration requirements for “pooled plan providers” pursuant to the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

The SECURE Act amended the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC) to establish a new type of multiple employer plan (MEP) called a pooled employer plan, or PEP, that must be administered by a person called a “pooled plan provider.” The SECURE Act allows pooled plan providers to start operating pooled employer plans beginning on January 1, 2021, but requires pooled plan providers to register with the Secretary of Labor and the Secretary of the Treasury before they begin operations.

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The proposed rule from the DOL’s Employee Benefits Security Administration (EBSA) would establish straightforward requirements for pooled plan providers to register with the DOL. The proposal, which includes both a mock-up of the required form and the instructions for the form, makes clear in the preamble that the Treasury Department and IRS intend to treat registration with the DOL in accordance with the final regulation to satisfy the SECURE Act requirement to register with the Secretary of the Treasury.

Under the proposal, the registration process would involve an initial registration, supplemental filings regarding specific reportable events and a final filing after the provider’s last pooled employer plan has been terminated and ceased operations. The proposal requires electronic filing of the new Form PR. The proposal explains that the EBSA believes the most efficient approach is to integrate the Form PR registration filing process into the current electronic filing system that employee benefit plans use to file their Form 5500 Annual Return/Report.

The NPRM includes a 30-day comment period and instructions for submitting comments. Public comments can be submitted electronically to the Federal eRulemaking portal at www.regulations.gov. A fact sheet about the NPRM is here.
Products August 20, 2020

Alger to Launch Its First Set of Actively Managed ETFs

Brown Brothers Harriman & Co. (BBH) will be the custodian, administrator and transfer agent of the funds.

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Fred Alger Management LLC (Alger), a growth equity investment manager, has announced its plans to launch two actively managed exchange-traded funds (ETF): Alger 25 ETF and Alger Mid Cap 40 ETF, marking the firm’s entry into the ETF space.

Both vehicles will be focused, high-conviction strategies. The products are scheduled for availability in the first quarter of 2021.

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“We have seen increased demand for our focused strategies since we launched our first one in 2012. Having these strategies available as actively managed ETFs enables investors who prefer an ETF vehicle to access our investment capabilities,” says Dan Chung, CEO and chief investment officer (CIO) of Alger. “Alger has a proud, 56-year record of investing in change and innovation, and we believe the innovation of actively managed ETFs is something that will help to continue to propel our growth.”

Alger 25 ETF will be managed by Ankur Crawford, executive vice president and portfolio manager. She has been with the firm for over 16 years and currently co-manages more than $22 billion in the firm’s U.S. large cap growth equity strategies. This ETF will execute a strategy similar to the Alger 25 Fund, which launched in 2017, by investing in 25 high-conviction large cap growth equities in the technology, health care, consumer discretionary and industrials sectors.

Alger Mid Cap 40 ETF will be managed by Amy Y. Zhang, executive vice president and portfolio manager. The ETF will seek to invest in 40 high-conviction mid cap growth equities. Zhang has been with the firm since 2015 and manages several of Alger’s small and mid-cap strategies, including the Alger Small Cap Focus Fund, a five-star Morningstar rated fund.

Alger has licensed ActiveShares from Precidian Investments LLC, which enables the firm to deliver actively managed investment strategies in an ETF vehicle without disclosing holdings daily. The ETFs will be listed on the NYSE Arca Inc., which currently lists nearly 80% of all U.S. ETF assets under management.

Brown Brothers Harriman & Co. (BBH) will be the custodian, administrator and transfer agent of the funds. Alger and BBH have worked closely together for more than a decade. 

“After more than 10 years partnering with Alger, we are excited to now partner on its first actively managed ETF launch, which will continue to bring fresh investment solutions to the collective market,” says Ryan Sullivan, senior vice president and head of U.S. ETF Services at BBH.

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