US - The Pension Benefit Guaranty Corporation (PBGC) has come under pressure to scrutinise its use of Wilshire Associates as its consultant in light of a Department of Labor (DoL) investigation into conflicts of interest under which Wilshire has been subpoenaed.
The federal insurer has also been asked to look into work carried out by Wilshire for terminated pension plans under the PBGC’s control.
However Wilshire has strenuously denied it has ever served as a pension consultant to any pension plans that have terminated and are now under the control of the PBGC.
A spokesperson at Wilshire said
“Wilshire consultants act objectively and in the best interests of all clients at all times. It is the policy of Wilshire Associates that all recommendations concerning portfolio managers made to investment consulting clients are based solely on the best interests of the client.”
As reported in Global Pensions’ May edition, Wilshire Associates and Mercer Investment Consulting have both confirmed they have received subpoenas from the DoL regarding its investigation into possible violations of fiduciary responsibilities of individual consultants under the Employee Retirement Income Security Act.
Watson Wyatt, Strategic Investment Solutions, Callan Associates, Russell Investment Group and Summit Strategies Group have confirmed they have not been subpoenaed by the DoL.
A letter addressed to the corporation’s executive director Bradley Belt has been sent by Democrat representatives Ed Markey and George Miller setting out their concerns.
“The labour department’s subpoena of Wilshire Associates should prod the PBCG to scrutinise all of the terminated plans under its control to which Wilshire had provided consulting services,” Markey said.
“Moreover, because Wilshire serves as a consultant to the PBGC itself, it is imperative that the PBCG ensure that the advice it has been receiving from Wilshire is objective and in the best interests of the beneficiaries whose terminated plans are now the PBCG’s responsibility.”
Amongst other information the PBGC has been asked to provide details of its contract with Wilshire and to explain whether it had asked the consultant to ascertain any possible conflicts of interest when it entered into a relationship.
Meanwhile, the Government Accountability Office is setting up an investigation into how the Securities Exchange Commission, the DoL and the PBGC oversee pension consultant conflicts of interest, and how undisclosed financial arrangements may affect the solvency of some pension plans.
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