Labor Department Investigates 3M Pension Plan

Inquiry relates to private equity investments, expenses, securities lending, and distributions of benefits.

The US Department of Labor has launched an investigation into manufacturing and technology giant 3M’s $19.7 billion pension plan, the company revealed in its most recent quarterly report. 

In its filing with the SEC, 3M said the Department of Labor notified the company in April 2015 that it had launched an investigation into the company’s pension plan pursuant to the federal Employee Retirement Income Security Act of 1974 (ERISA). The Labor Department told 3M the investigation relates to certain private equity investments, plan expenses, securities lending, and distributions of plan benefits.

The company said that in response to Labor Department requests, it produced documents and made employees available for interviews. It also said that in December 2016, the Department of Labor issued certain subpoenas to 3M and 3M Investment Management Corp. relating to the investigation.

“3M has produced additional responsive documents and is cooperating with the DOL in its investigation,” the company said in its filing. The Department of Labor has not provided a timeline for the completion of its investigation.

The investigation could involve a rule the Department of Labor issued in April 2016, which expands the types of retirement advice that is covered by fiduciary protections under ERISA. The rule is designed to prevent conflicts of interest that could lead advisers to recommend high-fee investments for retirees.

Although the rule was first announced last year, it didn’t become effective until April 2017. The Department of Labor said the new rule was intended to ensure that advisers provide advice that is in their clients’ best interest.

When it announced the new rule last year, the Labor Department said in a statement, “If advisers and firms do not adhere to the standards established in the exemption, retirement investors will be able to hold them accountable, either through a breach of contract claim (for IRAs and other non-ERISA plans) or under the provisions of ERISA.”

However, because the investigation predates the new rule, it couldn’t be the initial reason for the inquiry.



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