The Treasury Department announced Wednesday that, when it comes to pension plans, companies may not transfer the employee funds to banks so that they may be managed. The decision, coming in the midst of the banking sector's financial crisis, places new pressure on banks that depend on a portion of their swiftly declining revenues to participate in pension-plan management.
In a joint decision, the Treasury Department and the Internal Revenue Service decided that, except in cases "when the transfer is not connected with a transfer of significant business assets, operations, or employees," the transmission of the pension plan is "not permissible under current law."
However, the Treasury is working to help lawmakers to craft regulations which would permit the transactions. They, along with the Labor and Commerce Departments and the Pension Benefit Guaranty Corporation, offered a "framework of principles" that would "guide the development of legislation that could permit such transactions, in circumstances where the transaction is in the best interest of plan participants, their beneficiaries, employers, and the pension insurance system."
Frozen plans, or those benefits that are no longer being accumulated, are exempt under current regulation and can be managed by large banks, the Treasury added.
The principles include: ensuring that participants, their representatives, and ERISA regulators receive advanced notice of a plan transfer, approval of the parties, keeping transfers to "only financially strong entities in well-regulated sectors;" and requiring acquiring companies to demonstrate that participants' benefits and the pension insurance system would be at less risk after the transaction.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.