“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.”