Securian Retirement is urging sponsors that offer stable-value funds in their 401(k) plan to be aware that there can still be risks in such funds, depending on their holdings and the stability of the financial markets. Such funds need to be monitored, Securian says.
“It is imperative that employers thoroughly understable stable-value investment options,” said Kent Peterson, director of investment services at Securian. “In some ways, they have a higher degree of responsibility with these investments because the risks are not as obvious to participants.”
Securian says there are three main considerations when assessing a stable-value fund: 1) the risks of the underlying investments, 2) the contractual provisions of the fund and its guarantees, and 3) the financial soundness of the firm backing the guarantee.
Securian says: “Plan fiduciaries should not allow themselves to be lulled into complacency. The historical stability of returns of stable-value investments obscures their inner-workings. While the risks may be appropriately managed, the plan fiduciary can not presume this to be the case. A plan fiduciary must apply a prudent process that observes the facts and circumstances. Otherwise, the interests of plan participants may not be adequately protected.”