Empower Supports DOL Proposal on Flexible Investments
4 min read
Empower has welcomed the U.S. Department of Labor's proposed regulation on investment selection, calling it an important reaffirmation of long-standing fiduciary principles designed to protect retirement savers under the Employee Retirement Income Security Act (ERISA).
The Department's current proposal — "Fiduciary Duties in Selecting Designated Investment Alternatives" — takes a balanced, investment-neutral approach. It reinforces that those responsible for managing retirement plan investments should follow a thoughtful, disciplined process focused on delivering the best interests for participants, while maintaining flexibility in how investment decisions are made.
A Framework Built on Participant Protection
The proposal includes the framework for a safe harbor as part of the new regulation. Empower believes plan investment decision-makers need the ability to carefully evaluate a wide range of investment options — including alternative assets — so they can make well-informed decisions without unnecessary regulatory barriers or concern that prudent judgments will be second-guessed through litigation.
The Department's proposal appropriately reaffirms that ERISA is grounded in careful, well-reasoned process. By maintaining an investment-neutral framework, it makes clear that investment professionals can exercise sound judgment while prioritizing participants' long-term retirement goals front and center.
Six Key Factors for Fiduciaries
The proposal outlines a safe harbor that identifies six factors fiduciaries should consider when selecting designated investment alternatives for a plan. These factors are:
- ●Performance — evaluating historical and projected returns
- ●Fees — assessing the cost structure of investment options
- ●Liquidity — understanding accessibility of invested funds
- ●Valuation — determining accurate and fair pricing of assets
- ●Benchmarking — comparing performance against relevant standards
- ●Complexity — gauging the sophistication and risk of each investment alternative
In the DOL's view, a plan fiduciary that objectively, thoroughly, and analytically considers and makes a determination regarding any or all of the six factors should be able to confidently rely on that determination without undue fear of litigation.
Empower looks forward to reviewing the proposal in detail and providing constructive feedback during the rulemaking process.
The Executive Order Behind the Shift
On August 7, 2025, President Donald Trump issued an executive order titled "Democratizing Access to Alternative Assets for 401(k) Investors," directing federal agencies to examine how defined contribution plans could expand access to a broader range of investments.
The order called on the Department of Labor to revisit prior guidance and clarify responsibilities of those managing retirement plans when considering alternative investments within ERISA-governed plans. It also sought regulatory or other actions — potentially including new guidance or safe harbors — to support careful evaluation of these options in coordination with other financial regulators.
Key Takeaways
- ✓Empower has publicly endorsed the DOL's new proposed fiduciary investment regulation.
- ✓The proposal takes an investment-neutral approach, reinforcing ERISA fiduciary principles.
- ✓A six-factor safe harbor framework is proposed to guide fiduciary decision-making.
- ✓The regulation flows from a 2025 executive order aiming to expand 401(k) investment options.
- ✓The public comment period provides stakeholders an opportunity to shape the final rule.
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