ML BeneBits

Anti-ESG state legislation continues to focus on public retirement plan investing and asset management. Over the last year, 18 states have proposed or adopted state legislation or regulation limiting the ability of the state government, including public retirement plans, to do business with entities that are identified as “boycotting” certain industries based on environmental, social, and governance (ESG) criteria. Since our last update, four states have either adopted or proposed legislation or other forms of regulation that would restrict ESG activities using state assets.

As described in our prior blog post, the US Internal Revenue Service (IRS) recently extended many impending amendment deadlines for legislative changes made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), Bipartisan American Miners Act of 2019 (MINERS Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). However, for reasons that were not entirely clear, the IRS did not extend the amendment deadline for certain CARES Act changes at the time. Now, in Notice 2022-45, the IRS is extending the amendment deadline for the remaining CARES Act changes.

A group of state treasurers and state attorneys general (AG) have raised concerns that certain environmental, social, and governance (ESG) features of certain fund disclosures and other marketing collateral could create liability under state Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) and Anti-Boycott, Divestment, and Sanctions (Anti-BDS) laws. This is an issue that could impact government retirement plans and/or asset managers to public and private retirement plans.

The City of Philadelphia has enacted an ordinance requiring commuter benefits for employees, effective December 31, 2022 (the Ordinance). The Ordinance applies to employers who employ 50 or more “covered employees” in Philadelphia (excluding government employers). A covered employee for purposes of the Ordinance is any person working an average of 30 hours or more per week in Philadelphia for the same employer within the past 12 months.

This post serves as an update to our prior blog post analyzing the impact of this anti-ESG state legislation on public retirement plan investing.

At the same time that the federal government, through the US Department of Labor, appears to be easing retirement plan fiduciaries’ paths to considering certain environmental, social, or governance (ESG) factors in making investment decisions, some states are passing legislation that would prohibit the states from doing business with managers who invest based on ESG criteria.

The Internal Revenue Service (IRS) provided a late summer gift to retirement plan sponsors by extending some year-end plan amendment deadlines. In Notice 2022-33, the IRS extended the remedial amendment deadlines for certain Setting Every Community Up for Retirement Enhancement Act (SECURE Act) provisions (including the MINERS Act provision lowering in-service retirement age for pension plans from age 62 to age 59½) and Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provisions. This extension is particularly helpful for retirement plan sponsors hoping for additional guidance before amending plans to reflect certain SECURE Act changes (for example, the mandatory long-term part-time employee participation provisions and the new age 72 required minimum distribution rules).

The Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act) made sweeping changes affecting sponsors of defined contribution and defined benefit plans, retirement plan service providers, and providers of individual retirement accounts and annuities (IRAs). While many believed the SECURE Act went a long way toward expanding retirement savings opportunities and promoting retirement income security, some believed it could have gone further. There are currently several proposed retirement acts pending reconciliation in Congress.

This is the fourth and final post in a series aimed at getting the HR, benefits, and executive compensation functions of your organization ready for a potential sale or similar corporate transaction. This post addresses considerations for your organization’s health and welfare plans in a potential sale.

Seeking shareholder approval of an equity compensation plan has become a multi-step, often complex process. Gone are the days when management simply would discuss a share increase with the board of directors, and the company would include a brief discussion of the proposal in the proxy.