Swaps are an important tool of ERISA pension plans and any disruption to the way they are currently exercised would have a negative effect on those plans, the companies sponsoring the plans and plan participants, according to Bella Sanevich, general counsel of NISA Investment Advisors, L.L.C. who testified on behalf of the American Benefits Council and the Committee on Investment of Employee Benefit Assets before the Congressional Committee on Agriculture on Oct. 12.
The organizations wanted to address the swap-related problems raised by the Dodd-Frank Wall Street Reform and Consumer Protection Act for private retirement plans governed by the Employee Retirement Income Security Act of 1974.
ERISA pension plans use swaps to manage the risk resulting from the volatility inherent in determining the present value of a pension plan's liability and to manage plan funding obligations imposed on companies maintaining defined benefit plans, she said.
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