Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Notices 3947 

1 76 FR 66637, 66644, (October 27, 2011). 

2 89 FR 56422 (July 9, 2024). 

3 29 CFR 2509.95–1. 

4As discussed in more detail below, the 

exemption requires the Plan participants and 

beneficiaries to receive the majority of the benefits 

derived from the Reinsurance Arrangement. While, 

as noted above, it is ‘‘currently expected’’ that a 

5.55% increase in Plan’s participants’ and 

beneficiaries’ monthly pension benefits will achieve 

this objective, the exact percentage increase needed 

to ensure that Plan participants and beneficiaries 

receive the majority of the benefits derived from the 

proposed arrangement will not be known until the 

Plan actually enters into the GAC, which will occur 

after the Fronting Insurer is selected by the IB 95– 

1 Fiduciary. As described in further detail below, 

after the Plan enters into the GAC, Milliman, a 

second independent fiduciary acting solely on 

behalf of the Plan, must determine, based on 

objective data, that the Plan participants’ and 

beneficiaries’ monthly pension benefits have been 

increased by a percentage that ensures they will 

receive the majority of the benefits derived from the 

Reinsurance Arrangement. The methodology for 

making this calculation is discussed below. 

Milliman as independent fiduciary must, among 

other things, conclude, in a written report 

submitted to the Department, that Plan participants 

and beneficiaries received the appropriate 

percentage increase in their monthly pension 

benefits. The written report of the independent 

fiduciary will be available to the public by 

contacting EBSA’s Public Disclosure Office and 

referencing Exemption Application D–12073. 

breach of contract by the QPAM, or any 

claim arising out of the failure of such 

QPAM to qualify for the exemptive 

relief provided by PTE 84–14 as a result 

of a violation of PTE 84–14 Section I(g), 

other than a Conviction covered under 

the exemption. The Violation Notice 

must be sent to all affected Covered 

Plans and the Department within 30 

days after the independent auditor 

becomes aware of the violation. If the 

Violation Notice is not sent within the 

30-day period, the UBS QPAM may selfcorrect the failure by sending the 

Violation Notice to all affected Covered 

Plans and the Department with an 

addendum describing the failure within 

30 days after the completion of next 

scheduled audit. 

(u) All the material facts and 

representations set forth in the 

Summary of Facts and Representations 

are true and accurate at all times. 

(v) Each UBS QPAM must develop 

written processes that clearly describe: 

(1) how the QPAM identifies and 

quantifies ‘‘actual losses’’ for purposes 

of Section III(j)(2); and (2) how Covered 

Plans may recover or avoid incurring 

the losses that the UBS QPAM must 

indemnify or hold Covered Plans 

harmless from incurring pursuant to 

Section III(j)(2). Each UBS QPAM must 

develop these processes and deliver a 

copy of the processes to each Covered 

Plan within 90 days after the date the 

Department publishes a final exemption 

in the Federal Register and notify 

Covered Plans of any subsequent 

material changes to the processes within 

30 days of the effective date of such 

changes. Applicability Date: This 

exemption will be in effect for the 

period beginning on June 12, 2024 and 

ending on June 11, 2029, as well as the 

period of June 12, 2023, through June 

11, 2024. 

Signed at Washington, DC. 

George Christopher Cosby, 

Director, Office of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2025–00812 Filed 1–14–25; 8:45 am] 

BILLING CODE 4510–29–P 

EMPLOYEE BENEFITS SECURITY 

ADMINISTRATION 

[Prohibited Transaction Exemption 2025– 

02; Exemption Application No. D–12073] 

Exemption From Certain Prohibited 

Transaction Restrictions Involving 

Memorial Sloan Kettering Cancer 

Center (MSKCC or the Applicant) 

Located in New York, New York 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Notice of exemption. 

SUMMARY: This document contains a 

notice of exemption issued by the 

Department of Labor (the Department) 

from certain prohibited transaction 

restrictions of the Employee Retirement 

Income Security Act of 1974 (ERISA or 

the Act) and/or the Internal Revenue 

Code of 1986 (the Code). This 

exemption permits the reinsurance of 

risks and the receipt of a premium by 

MSK Employee Benefits IC (MSK EB or 

the Captive), a captive insurance and 

reinsurance subsidiary that is whollyowned by MSKCC, in connection with 

a single premium group insurance 

contract sold by an unrelated fronting 

insurer (the Fronting Insurer or the 

Fronter) to provide pension annuities to 

participants and beneficiaries in the 

Memorial Sloan Kettering Cancer Center 

Pension Plan (the Plan). The relief 

provided in the exemption will only be 

available if the conditions in Section III 

are met in conformance with the 

definitions in Section I. 

DATES: The exemption will be in effect 

on January 15, 2025. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Joseph Brennan of the Department at 

(202) 693–8456. (This is not a toll-free 

number.) 

SUPPLEMENTARY INFORMATION: The 

Applicant submitted an exemption 

application requesting an individual 

exemption pursuant to ERISA section 

408(a) in accordance with the 

Department’s exemption procedures set 

forth in 29 CFR part 2570, subpart B.1

On July 9, 2024, the Department 

published a notice of proposed 

exemption in the Federal Register.2

Based on adherence to the conditions of 

this exemption by MSKCC, the 

Independent Fiduciary, and the IB 95– 

1 Independent Fiduciary (as defined 

below), the Department makes the 

requisite findings under ERISA section 

408(a) that this exemption is: (1) 

administratively feasible for the 

Department, (2) in the interest of the 

participants and beneficiaries of the 

Plan, and (3) protective of the rights of 

the participants and beneficiaries of the 

Plan. Accordingly, affected parties 

should be aware that the conditions 

incorporated in this exemption are, 

individually and taken as a whole, 

necessary for the Department to grant 

the relief provided herein. The 

Department would not have granted this 

exemption without these conditions. 

Background 

Overview of the Exemption 

1. Under the exemption, the Plan will 

enter into a single premium group 

annuity insurance contract (the GAC) 

with an unrelated Fronting Insurer that 

will be selected by an IB 95–1 Fiduciary 

in compliance with the requirements of 

the Department’s Interpretive Bulletin 

95–1.3 The Fronting Insurer will, in 

turn, enter into a reinsurance contract 

(the Reinsurance Arrangement) with the 

Captive. Under the Reinsurance 

Arrangement, the Captive will reinsure 

100 percent of the Plan’s risks under the 

GAC. Importantly, the Fronting Insurer 

will remain fully responsible for the 

benefits of participants and beneficiaries 

for the entire duration of the GAC and 

Reinsurance Arrangement if the Captive 

fails to fulfill its contractual obligations 

to the Fronting Insurer, without any 

caveats, contingencies, or conditions 

that would relieve or limit the Fronting 

Insurer’s contractual obligation to pay 

benefits to the Plan’s participants and 

beneficiaries. 

In connection with the Reinsurance 

Arrangement, all Plan participants and 

beneficiaries will receive an increase to 

their monthly pension benefit that is 

currently expected to be 5.55 percent.4

The Applicant expects that this benefit 

increase will provide $66,408,000 in 

additional benefits to the Plan’s 

participants and beneficiaries. 

Importantly, this increase will remain in 

place for the entirety of Plan 

participants’ and beneficiaries’ lives 

and, as a condition of this exemption, 


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5Under the Plan, the normal form of payment for 

an unmarried participant is a single-life annuity, 

and the normal form of payment for a married 

participant is a joint and 50% survivor annuity. 

6 29 CFR 2509–95–1. As stated in IB 95–1, when 

conducting a search, a fiduciary must evaluate a 

number of factors relating to a potential annuity 

provider’s claims-paying ability and 

creditworthiness. Reliance solely on ratings 

provided by insurance rating services would not be 

sufficient to meet this requirement. In this regard, 

the types of factors a fiduciary should consider 

would include, among other things: (a) the quality 

and diversification of the annuity provider’s 

investment portfolio; (b) the size of the insurer 

relative to the proposed contract; (c) the level of the 

insurer’s capital and surplus; (d) the lines of 

business of the annuity provider and other 

indications of an insurer’s exposure to liability; (e) 

the structure of the annuity contract and guarantees 

supporting the annuities, such as the use of separate 

accounts; and (f) the availability of additional 

protection through state guaranty associations and 

the extent of their guarantees. 

7This exemption would not relieve the Plan’s 

fiduciaries from their express ERISA duties to 

manage the assets of the plan solely in the interest 

of the plan and its participants and beneficiaries, 

including when the fiduciaries are contemplating 

terminating the plan. 

8The effective date of the conversion would be 

aligned with the Plan’s termination (i.e., the 

Conversion Option will be exercised only if and 

when the Plan terminates). 

9As a condition of this exemption, after the BuyIn phase for the Reinsurance Arrangement is 

completed and MSKCC exercises the Conversion 

Option, MSKCC will terminate the Plan in 

compliance with all applicable Code and ERISA 

requirements. 

MSKCC will not reduce any benefits 

that participants and beneficiaries 

receive from MSKCC, including benefits 

they receive from the Plan, as a result 

of the Reinsurance Arrangement. Absent 

this exemption, participants and 

beneficiaries would not receive this 

estimated 5.55 percent benefit increase. 

The Plan 

2. The Plan is a defined benefit 

pension plan that provides retirement 

and death benefits for eligible 

participants.5 The Plan administrator 

and named fiduciary is the MSK 

Executive Benefits Committee and the 

Plan trustee is JPMorgan Chase. In 2012, 

MSKCC amended the Plan to close 

enrollment to employees hired on or 

after December 16, 2012. In 2020, 

MSKCC amended the Plan to freeze 

future benefit accruals effective 

December 20, 2020. As of December 31, 

2023, the Plan covered 8,089 

participants and held $1,384,897,170 in 

total assets. 

The Captive 

3. MSK Insurance US, Inc. (MSK US) 

is MSKCC’s wholly-owned captive 

insurance and reinsurance subsidiary. 

MSK US writes approximately $75 

million in premiums and insures the 

property and equipment of MSKCC. The 

Captive (MSK EB) is a segregated cell 

within MSK US that will be used to 

reinsure the risks related to the 

Reinsurance Arrangement and this 

exemption. While MSK US will contract 

with the Fronting Insurer as part of the 

Reinsurance Arrangement, MSK EB will 

hold the reserves that will be used to 

pay benefits to the Plan’s participants 

and beneficiaries under the GAC. 

The IB 95–1 Fiduciary and the Selection 

of the Fronting Insurer 

4. MSKCC has engaged Fiduciary 

Counselors Inc. (FCI) as the IB 95–1 

Fiduciary that is responsible for 

selecting a Fronting Insurer based on a 

competitive bidding process. The 

Applicant represents that FCI will send 

requests for proposals to potential 

Fronting Insurers and will then select a 

Fronting Insurer in compliance with the 

Department’s Interpretive Bulletin (IB) 

95–1, which provides several factors 

that fiduciaries must consider to ensure 

they select the safest annuity available 

for a plan.6 Within 30 days after the 

GAC has been executed, FCI must 

provide the Department with a written 

report that: (a) identifies the Fronting 

Insurer selected; (b) contains a detailed 

representation regarding the 

methodology used to make the selection 

and how that methodology determines 

that the selected Fronting Insurer and 

GAC met the requirements of IB 95–1; 

and (c) prudently concludes that it 

would have been consistent with IB 95– 

1 to select the Fronting Insurer as the 

insurer for a final termination buy-out 

annuity had MSKCC adopted that 

approach. 

Mechanics of the Reinsurance 

Arrangement 

5. The Plan will purchase the GAC 

from the Fronting Insurer by using 

current Plan assets to pay a one-time 

premium to the Fronting Insurer. The 

Fronting Insurer will enter into an 

indemnity reinsurance contract with the 

Captive and will transfer the premium 

amount paid by the Plan to the Captive 

where it will be held in reserve. The 

GAC will cover all of the Plan’s 

liabilities and have two phases that are 

described below. 

Buy-In Phase: During the Buy-in 

Phase, the Plan will hold the GAC as a 

plan asset and the Plan will remain 

active. During this phase, the Fronting 

Insurer will send funds to the Plan 

Trustee (JPMorgan Chase) to make 

benefit payments to participants and 

beneficiaries and, every three months, 

the Fronting Insurer will submit 

payment requests to the Captive 

requesting reimbursement to cover 

participant and beneficiary distributions 

paid by the Fronting Insurer during the 

preceding three months. If the Fronting 

Insurer and Captive fail to pay benefits 

during the Buy-In Phase, MSKCC will 

still be required to fund the Plan, and 

the Plan will still be required to pay all 

benefits due to participants and 

beneficiaries. 

Following the purchase of the GAC, 

and while the Plan is still active, the 

Plan’s fiduciaries will be obligated to 

manage all Plan assets, including those 

assets not used to purchase the GAC, 

solely in the interest of participants and 

beneficiaries and exclusively for their 

benefit. Any payments for Plan 

expenses that do not clearly and 

exclusively benefit participants and 

beneficiaries will be subject to 

additional scrutiny. 

Buy-Out Phase: The GAC will contain 

a ‘‘conversion option’’ (the Conversion 

Option) that MSKCC can exercise (at 

any time) if and when it decides to 

terminate the Plan.7 If exercised, the 

Conversion Option would transition the 

GAC from the Buy-in Phase to the BuyOut Phase,8 and the following events 

would occur: (a) the GAC will no longer 

be held by the Plan as a Plan asset; (b) 

MSKCC will replace the Plan as the 

holder of the GAC; (c) the Fronting 

Insurer will issue annuity certificates to 

all Plan participants and beneficiaries; 

and (d) the Fronting Insurer will take 

complete control of the administration 

of the GAC and make benefit payments 

directly to the former Plan participants 

and beneficiaries that have become 

annuitants.9 During the Buy-Out Phase 

the Captive will continue to hold the 

reserves and the Fronting Insurer will 

continue to remit quarterly 

reimbursement payment requests to the 

Captive. 

The relationship between the Fronting 

Insurer and Captive will remain the 

same during both the Buy-In and BuyOut Phases; therefore, the Fronting 

Insurer will assume full responsibility 

for benefit obligations to participants 

and beneficiaries, without conditions or 

caveats, and the Captive will assume the 

reinsurance risk. During both phases, 

the Captive is fully obligated to make 

payments to the Fronting Insurer under 

the Reinsurance Arrangement. This 

means that the Captive is fully obligated 

to satisfy the benefit obligations, but the 

mechanism of that obligation flows 

through the Fronting Insurer rather than 

directly to the Plan or to participants 

and beneficiaries. 

As a condition of this exemption, the 

Fronting Insurer must have a direct 

contractual relationship with the Plan 

during the Buy-In phase of the GAC and 

with the Plan’s participants and 


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10The Fronting Insurer will be required to carry 

statutory reserves on its financial statements in 

such amounts as the insurance law in its state of 

domicile may require, and the collateral 

requirements will be based on those reserve 

requirements. The Fronting Insurer will have the 

right to access the collateral assets in accordance 

with the Reinsurance Arrangement. Collateral assets 

will back the Captive’s reserves but will not be 

distinct from them. 

11The Applicant represents that because MSKCC 

is a non-profit entity, there will be no associated tax 

advantages flowing to MSKCC from the Reinsurance 

Arrangement. 

12The formula underlying the 5.37 percent 

calculation is based on the actual percentage of 

savings in the annuity purchase, including the 

value of the pension benefit enhancement. All 

details regarding the formula used to calculate the 

Benefit Enhancement are included in the exemption 

application file and available to the public upon 

request. 

13The Independent Fiduciary confirmed that the 

present value of its fees over the expected life of 

the GAC would be $1,968,000. As a condition of 

this exemption, MSKCC will add this entire amount 

into the GAC as a second-layer benefit enhancement 

which will result in an additional .18 percent 

permanent monthly pension increase for all 

participants and beneficiaries. Thus, the total 

benefit enhancement under this exemption is 

expected to be 5.55 percent. 

beneficiaries during the Buy-Out phase, 

without any caveats, contingencies, or 

conditions that would relieve or limit 

the Fronting Insurer’s contractual 

obligation to pay benefits to the Plan’s 

participants and beneficiaries. 

Collateral Under the Reinsurance 

Agreement 

6. As part of the Reinsurance 

Arrangement, the Captive will be 

collateralized by MSKCC. The Captive is 

expected to use the assets received as 

the reinsurance premium to collateralize 

its obligations under the Reinsurance 

Arrangement, in each case with such 

modifications as the Fronting Insurer’s 

regulatory, accounting, or commercial 

considerations may require.10 MSKCC 

will capitalize the Captive in 

accordance with the requirements of the 

State of Vermont and will provide a 

parental guarantee for the benefit of the 

Fronting Insurer with respect to the 

Captive’s obligations. Parental guarantee 

assets will be separate and apart from 

the Plan assets used to purchase the 

GAC. 

Oversight by the Vermont DFR 

7. Before MSKCC submitted its 

exemption request, the Captive 

requested and received formal approval 

from the Vermont Department of 

Financial Regulation (Vermont DFR) to 

enter into the Reinsurance Arrangement 

and operate the Captive to reinsure the 

Plan’s pension benefits. The Vermont 

DFR issued formal approval after 

reviewing the Captive’s Feasibility 

Report, which included, among other 

things, actuarial projections, an 

investment policy statement, and a 

business plan. The Captive will be 

required to submit independent audit 

and actuarial reports to the Vermont 

DFR annually and, at least once every 

five years, the Vermont DFR will 

conduct a thorough review of the 

Captive and issue an Exam Report. 

This exemption requires the 

Independent Fiduciary to obtain and 

review all independent audit and 

actuarial reports submitted by the 

Captive to the Vermont DFR as well as 

all Exam Reports issued to the Captive 

by the Vermont DFR, as long as the plan 

remains active. Further, the 

Independent Fiduciary must provide the 

Department with a detailed summary of 

each Exam Report in its annual 

Independent Fiduciary Report covering 

the year the Exam Report is issued. This 

exemption also requires the Captive to 

request a Certificate of Good Standing 

from the Vermont DFR every year and 

provide the Department with any Exam 

Reports it receives no later than 30 days 

after MSKCC receives such report. 

Financial Benefit to MSKCC 

8. The Applicant represents that 

purchasing the GAC in conjunction with 

the Reinsurance Arrangement will result 

in an estimated ten percent cost savings. 

For instance, if the single premium cost 

to purchase the GAC from the Fronting 

Insurer without the Captive would be 

$1.2 billion, the cost to purchase it with 

the Captive would be $1.08 billion. 

Since the financial benefit of this cost 

reduction would inure to MSKCC, this 

exemption requires MSKCC to provide 

the majority of the derived financial 

benefit to the Plan’s participants and 

beneficiaries in the form of a permanent 

monthly annuity payment increase, as 

described below.11

The Primary Benefits Test 

9. This exemption requires the Plan to 

receive the majority of the financial 

benefits flowing from the Reinsurance 

Arrangement (the Primary Benefits 

Test). Under this exemption, the 

Independent Fiduciary must quantify all 

benefits derived from the Reinsurance 

Arrangement, including all benefits 

directly and indirectly received by 

MSKCC and any entity affiliated with 

MSKCC, and confirm that participants 

and beneficiaries receive at least 51 

percent of all benefits derived from the 

arrangement. Throughout the 

Reinsurance Arrangement, while the 

Plan remains active, the Independent 

Fiduciary must continuously review 

and confirm that the Primary Benefits 

Test is being met. 

MSKCC-Provided Benefit Enhancement 

10. MSKCC will implement a onetime benefit increase sufficient to pass 

the Primary Benefits Test (the Benefit 

Enhancement). If the savings generated 

from using the Captive, as determined 

by the Independent Fiduciary, equals 10 

percent, MSKCC will implement a 

Benefit Enhancement in the form of a 

permanent 5.37 percent 12 increase to 

the monthly benefits of all participants 

and beneficiaries that will continue 

without reduction for the remainder of 

their lives. In addition, and as discussed 

below, MSKCC will add a second layer 

benefit enhancement of .18% for 

participants and beneficiaries—which is 

derived from the present value of the 

Independent Fiduciary’s fees over the 

expected life of the GAC, post-plan 

termination.13 Thus, if the savings from 

the Captive equals 10 percent, all plan 

participants and beneficiaries will 

receive a permanent pension benefit 

increase of 5.55 percent. Collectively, 

Plan participants and beneficiaries 

would receive increased pension benefit 

payments with a present value of 

$66,408,000 and, therefore, will receive 

the majority of the financial benefit 

derived from the Reinsurance 

Arrangement plus the present value of 

the Independent Fiduciary’s fees over 

the expected life of the GAC. 

As noted in the proposed exemption, 

MSKCC represents that: (a) apart from 

the conditions of this exemption, 

MSKCC otherwise had no preexisting 

obligation to provide a benefit increase 

to participants and beneficiaries; and (b) 

before its formal submission for 

exemptive relief, MSKCC had not 

considered or offered any increase to the 

current value of the benefits of the 

Plan’s participants and beneficiaries. 

Department’s Note: The Department 

notes that the ratio of the benefit 

enhancement to MSKCC savings 

described in this exemption should not 

be relied upon as a precedent for future 

exemption applicants. If the Department 

receives applications for similar 

reinsurance exemptions in the future, it 

may require a higher ratio of participant 

and beneficiary benefit enhancements to 

plan sponsor savings, based upon the 

specific design of the transaction and 

financial circumstances of the plan and 

plan sponsor. In this regard, the 

Department’s exemption procedure 

regulation provides that ‘‘[t]he existence 

of previously issued administrative 

exemptions is not determinative of 

whether the Department will propose 

future exemptions for applications with 

the same or similar facts, or whether a 

proposed exemption will contain the 

same conditions as a similar previously 


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3950 Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Notices 

14 29 CFR 2570.30(g). 

issued administrative exemption.’’ 14 As 

the Department stated in the preamble 

to that regulation, ‘‘. . . this language 

reinforces the Department’s existing 

policy that it has the sole discretionary 

authority to issues exemptions and is 

not bound by the facts or conditions of 

prior exemptions in making 

determinations with respect to an 

exemption application.’’ 

Independent Fiduciary 

11. Milliman will serve as the Plan’s 

Independent Fiduciary with respect to 

the Reinsurance Arrangement and 

Kathleen E. Ely of Milliman will 

perform the functions required of the 

independent fiduciary on behalf of 

Milliman with respect to the 

requirements of this exemption. As the 

Plan’s Independent Fiduciary, Milliman 

must represent the Plan in accordance 

with the obligations of prudence and 

loyalty under ERISA sections 

404(a)(1)(A) and (B) and determine 

whether the Reinsurance Arrangement 

is in the interests of the Plan’s 

participants and beneficiaries. In this 

regard, before the Plan purchases the 

GAC, Milliman must prudently and 

loyally confirm that the Benefit 

Enhancement is sufficient to meet the 

Primary Benefits Test. 

Further, not later than 30 days after 

the purchase of the GAC and 

consummation of the Reinsurance 

Arrangement, Milliman must confirm to 

the Department in writing that all terms 

and conditions of the exemption have 

been met. This confirmation must 

include copies of each document relied 

upon and the steps taken to make this 

determination. In this written 

determination, the Independent 

Fiduciary must confirm the actual cost 

savings associated with the Reinsurance 

Arrangement by obtaining 

documentation from the Fronting 

Insurer that compares the cost to 

purchase the GAC without the Captive 

in place to the cost to purchase the GAC 

with the Captive in place. The 

Independent Fiduciary must include 

this documentation from the Fronting 

Insurer with its written determination to 

the Department. 

The Independent Fiduciary must also 

monitor and ensure that any assets that 

remain in the Plan during the Buy-In 

phase of the Reinsurance Arrangement 

are managed and used exclusively to 

provide benefits to Plan participants 

and beneficiaries and to defray 

reasonable expenses of administering 

the Plan in compliance with ERISA 

sections 403(c)(1) and 404(a)(1)(A). 

Ms. Ely and Milliman represent that 

they are independent of all parties 

associated with the Reinsurance 

Arrangement, including the Plan, 

MSKCC, and the Captive. Milliman also 

represents that its gross income received 

from parties in interest to the Plan in 

connection with the Reinsurance 

Arrangement represents less than 0.1 

percent of Milliman’s gross annual 

income from all sources. 

Milliman will be required to continue 

monitoring, enforcing, and ensuring 

compliance with all conditions of this 

exemption until the plan is terminated, 

and report any instance of noncompliance immediately to the 

Department. As long as the plan is 

active, Milliman must submit written 

annual Independent Fiduciary Reports 

to the Department certifying under 

penalty of perjury whether each term 

and condition of the exemption has 

been met over the applicable period. In 

this regard, Milliman’s final 

Independent Fiduciary Report will be 

due to the Department no later than six 

months after the Plan’s termination 

date. Please see below for a discussion 

regarding the removal of the 

Independent Fiduciary after plan 

termination. 

In its final independent fiduciary 

report, Milliman must determine that 

the plan termination, transfer of assets, 

and new contractual arrangements 

accord with all conditions of this 

exemption at the time of termination, 

and that it remains the case that the 

primary benefits of this arrangement are 

expected to inure to the plan for the 

entire duration of the arrangement. The 

Independent Fiduciary must also 

represent that MSKCC has not managed 

plan assets in a way that results in 

MSKCC receiving a greater benefit from 

this arrangement than plan participants 

and beneficiaries. 

Written Comments 

In the proposed exemption, the 

Department invited all interested 

persons to submit written comments 

and/or requests for a public hearing 

with respect to the notice of proposed 

exemption by August 23, 2024. The 

Department received written comments 

from the Applicant and Plan 

participants and beneficiaries and no 

requests for a public hearing. 

I. Comments From the Applicant 

1. Removal of the Independent 

Fiduciary After Plan Termination 

The proposed exemption requires an 

Independent Fiduciary to act on behalf 

of the Plan’s participants and 

beneficiaries and provide oversight 

through the end of the Reinsurance 

Arrangement. Section III(h)(4) of the 

proposed exemption would require the 

Independent Fiduciary to: ‘‘Represent 

and protect the interests of the 

participants and beneficiaries of the 

Plan during both the Buy-In and BuyOut Phases to ensure they receive 

everything that they are entitled to 

receive under this exemption, the terms 

of the Plan, and the GAC.’’ Further, 

Section III(i)(1) of the proposed 

exemption would require the 

Independent Fiduciary to submit annual 

Independent Fiduciary Reports to the 

Department until the end of the 

Reinsurance Arrangement. The 

proposed exemption also provides that 

the Independent Fiduciary must 

prudently and loyally confirm that the 

Primary Benefits Test is met throughout 

the Reinsurance Arrangement and 

continue to monitor, enforce, and 

ensure compliance with all conditions 

of the exemption throughout the 

Reinsurance Arrangement. 

MSKCC requests the Department 

remove the independent fiduciary 

requirement following the Plan’s 

termination. MSKCC states that the 

phrases ‘‘throughout the Reinsurance 

Arrangement’’ and ‘‘throughout the 

duration of the Reinsurance 

Arrangement’’ should be modified, as 

they suggest that there is a Plan 

fiduciary obligation that extends beyond 

the termination of the Plan. MSKCC 

asserts that the Plan will terminate in 

connection with the Buy-Out 

conversion of the GAC and cease to 

exist, and once the Plan terminates, 

there will be no ongoing fiduciary 

obligations with respect to the Plan. 

MSKCC further asserts that at the time 

of the Plan’s termination, Plan 

fiduciaries must ensure that the Plan’s 

obligations are discharged, and that 

determination would include ensuring 

that the structure of the Reinsurance 

Arrangement complies with the 

exemption’s conditions. 

Accordingly, MSKCC requests the 

Department to revise Section III(h)(4) of 

the proposed exemption to read as 

follows: ‘‘The Independent Fiduciary 

must . . . Represent and protect the 

interests of the participants and 

beneficiaries of the Plan unless and 

until the Plan is terminated to ensure 

they receive everything that they are 

entitled to receive under this 

exemption, the terms of the Plan, and 

the GAC.’’ 

Department’s Response: After 

considering this comment, the 

Department has determined to remove 

the requirement that the Independent 

Fiduciary perform duties beyond the 

date of a plan termination if the 


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Independent Fiduciary calculates the 

present value of its expected fees over 

the expected life of the GAC and 

MSKCC adds that amount into the GAC 

as an additional benefit enhancement 

for participants and beneficiaries. Also, 

as noted above, the Independent 

Fiduciary has confirmed that the 

present value of its expected fees is 

$1,968,000. Therefore, as a condition of 

this exemption, MSK must add an 

additional $1,968,000 as a second-layer 

benefit increase into the GAC to 

permanently increase the pension 

benefits for participants and 

beneficiaries. This $1,968,000 secondlayer benefit increase will add an 

additional .18 percent increase to the 

monthly annuity payable to participants 

and beneficiaries and thus increase the 

total monthly annuity payable to 

participants and beneficiaries from 5.37 

percent to 5.55 percent. 

The Department’s determination to 

allow the Independent Fiduciary to step 

aside after plan termination is based 

upon an understanding that the 

Vermont DFR will be performing 

substantial oversight over the Captive 

after the plan is terminated, and that 

this oversight is similar to the duties the 

Independent Fiduciary would have had 

to perform under the proposed 

exemption. The Department notes that 

under this exemption, the Captive must 

request a Certificate of Good Standing 

from the Vermont DFR every year, and 

that before issuing a Certificate, 

Vermont DFR will review the Captive, 

its reserves, and investments. If 

Vermont finds anything concerning, 

including risk, solvency, investments, or 

compliance issues, they will not issue 

the Certificate to the Captive. Also, 

during this review, the Vermont DFR 

will look into the financial health of 

MSKCC and the unrelated Fronting 

Insurer. 

Additionally, at least once every five 

years, the Vermont DFR will conduct a 

more thorough examination of the 

Captive and produce an Exam Report. 

Through its Exam Report process, the 

Vermont DFR will determine 

compliance with state insurance laws 

and regulations and evaluate the 

Captive’s solvency. As part of this 

report, a team of examiners from 

Vermont DFR will conduct an in-depth 

review of the Captive’s operations and 

balance sheet, and if they find 

something concerning, they will issue a 

Company Action Letter or a Regulatory 

Action Letter to the Captive. The 

Department notes that this exemption 

requires MSK to submit all Exam 

Reports to the Department. 

Moreover, the Fronting Insurer will 

have a strong interest in ensuring the 

Captive has sufficient reserves to pay 

benefit liabilities because the Fronter 

pays pension benefits to participants 

and beneficiaries from its own account. 

The Fronter’s obligation to participants 

and beneficiaries is unconditional and 

will continue even if the Captive 

becomes insolvent, because the 

Fronter’s arrangement with the Captive 

is an indemnity reinsurance 

arrangement. This means that the 

Captive reimburses the Fronter every 

three months for pension payments that 

the Fronter has already paid to 

participants and beneficiaries over the 

preceding three months. Under the 

reinsurance contract between the 

Fronter and the Captive, the Fronter 

monitors the investment of the Captive’s 

reserves and also has the contractual 

right to draw on a collateral account that 

is funded by the Captive. 

Finally, the Department notes that 

after plan termination, all participants 

and beneficiaries become individual 

annuitants with the Fronter, and those 

annuities are regulated by the state in 

which the Fronter is domiciled. Under 

state insurance law, the Fronter is 

required to submit to an annual 

independent audit and file that report 

with their state regulator. 

Based on the foregoing, the 

Department has determined to remove 

the requirement that the Independent 

Fiduciary perform duties beyond the 

date of a plan termination because there 

will be sufficient oversight of the 

Captive after the plan terminates to 

ensure that participants and 

beneficiaries are protected and their 

benefits remain secure. Moreover, the 

second-layer benefit enhancement that 

will result from adding the additional 

$1,968,000 into the GAC is a meaningful 

additional benefit for participants and 

beneficiaries that will provide a more 

secure retirement for all participants 

and beneficiaries covered by the Plan. 

2. Timing of Identifying the Fronting 

Insurer 

In paragraph 5 of the proposed 

exemption, the Department states that 

‘‘given the importance of a highly rated 

Fronting Insurer to the security of the 

pension benefits provided to the Plan’s 

participants and beneficiaries, Fiduciary 

Counselors must provide the 

Department with a written submission 

that identifies the Fronting Insurer 

selected along with a written 

representation detailing the 

methodology that it used to select the 

Fronting Insurer and how that 

methodology, and the Fronting Insurer 

selected, met the requirements of IB 95– 

1.’’ Section III(e)(1) of the proposed 

exemption states that this report must 

be provided to the Department ‘‘before 

this proposed exemption is granted.’’ 

MSKCC maintains in its comment 

letter, that it will not be practicable for 

the IB 95–1 Fiduciary to select the 

Fronting Insurer and provide the IB 95– 

1 Report to the Department before the 

exemption is granted. According to 

MSKCC, FCI would not be able to 

negotiate every term of the annuity 

purchase with the Fronter—including 

final pricing—until the terms of the 

final exemption are known and the 

timing of the annuity purchase is certain 

and imminent. And further, if the final 

exemption is conditioned upon the 

selection of a particular Fronting 

Insurer, MKSCC would lose leverage to 

negotiate final annuity purchase terms 

favorable to the Plan’s participants and 

beneficiaries. 

Instead, MSK requests that the 

Department revise the exemption to 

require the IB 95–1 Fiduciary to provide 

its written IB 95–1 Report and identify 

the Fronting Insurer after the exemption 

is granted. However, in their comment 

letter, MSKCC offers to provide the 

Department with a list of Fronting 

Insurers that FCI has determined should 

be considered and approached as part of 

the request for proposal (RFP) process 

before the Department issues the final 

exemption, but on a confidential basis 

to preserve the integrity of the RFP 

process. Further, if FCI subsequently 

decides not to select a Fronter from the 

list, they would provide the Department 

with 30 days advance notice before 

selecting the Fronter to provide the 

Department with an opportunity to 

comment or discuss with MSKCC before 

the Fronter is engaged. 

Department’s Response: After 

considering the applicant’s request and 

rationale, the Department accepts the 

Applicant’s request to remove the 

condition requiring Fiduciary 

Counselors to provide a written 

submission that identifies the Fronting 

Insurer selected along with detail on the 

methodology it used to select the 

Fronter and how that methodology, and 

the Fronter selected, met the 

requirements of IB 95–1 before the 

exemption is granted. The Department, 

instead, has revised the exemption to 

remove this requirement entirely. 

Therefore, Fiduciary Counselors will 

not be required to submit anything to 

the Department before the exemption is 

granted. In making this change, the 

Department emphasizes that Fiduciary 

Counselors must follow IB 95–1 and 

prudently and loyally select the safest 

available annuity for the plan 

participants and beneficiaries and 

submit a detailed written report to the 

Department regarding the methodology 


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the IB 95–1 Fiduciary used to determine 

that the selected Fronting Insurer and 

GAC met the requirements of IB 95–1 no 

later than 30 days after the execution of 

the GAC. 

3. Use of Participant Data 

Section III(j) of the proposed 

exemption states that ‘‘neither MSKCC 

nor any related entity may use 

participant or beneficiary-related data, 

or information generated by or derived 

from the Reinsurance Arrangement in a 

manner that benefits MSKCC or a 

related entity.’’ MSKCC contends that 

this condition is too broad and requests 

that it be changed to only prohibit 

MSKCC from using participant data ‘‘for 

purposes unrelated to the 

administration, funding, or security of 

retirement benefits (including 

obligations under the GAC and the 

Reinsurance Arrangement).’’ MSKCC 

states that the proposed condition is too 

broad because MSKCC benefits by 

providing retirement benefits to its 

employees and retirees and ensuring 

that benefits are secure and 

appropriately administered. 

Department’s Response: After 

considering this comment, the 

Department accepts MSKCC’s requested 

revision with some modifications that 

narrow the scope of MSKCC’s requested 

change. The Department is limiting the 

expanded permitted uses of participant 

data under this exemption to purposes 

related to the administration, funding, 

or security of the GAC, Reinsurance 

Arrangement, or Plan. Expanding the 

scope of permissible data use to 

administration, funding, and security of 

the GAC, Reinsurance Arrangement, or 

Plan is appropriate, but expanding 

permitted uses to purposes related to 

the administration, funding, or security 

of retirement benefits generally, as 

requested by MSKCC, is too broad. 

Therefore, Section III(j) of this 

exemption provides that ‘‘neither 

MSKCC nor any related entity may use 

participant or beneficiary-related data, 

or information generated by or derived 

from the Reinsurance Arrangement for 

purposes unrelated to the 

administration, funding, or security of 

the GAC, Reinsurance Arrangement, or 

Plan.’’ 

The Department notes that this 

exemption does not permit the use of 

participant and beneficiary data in a 

way that primarily benefits MSKCC, the 

Captive, or the Fronting Insurer. Under 

this exemption, prohibited uses of 

participant and beneficiary data 

include, but are not limited to, selling 

the data to third parties, using the data 

to cross-sell services, or using the data 

to target participants and beneficiaries 

to attempt to sell them new products or 

services. MSKCC did not explain why 

they would need to use information 

derived from the Reinsurance 

Arrangement for more general purposes. 

Because the security of participant data 

is critically important to the 

Department, the Plan and participants 

and beneficiaries, the Department has 

construed its permitted uses as narrowly 

as possible. 

4. Allow MSKCC To Take Dividends 

From the Captive 

Section III(p) of the proposed 

exemption states that ‘‘MSKCC may not 

receive a dividend or any other form of 

distribution from the Captive at any 

point during the Reinsurance 

Arrangement.’’ In its comment letter, 

MSKCC requests a revision that would 

allow it to receive dividends and 

distributions from the Captive, provided 

that MSKCC would contribute the 

majority of each such dividend or 

distribution as a benefit enhancement to 

another MSKCC-sponsored employee 

benefit plan under the Primary Benefits 

Test. 

Department’s Response: The 

Department declines to make this 

requested change because there is no 

compelling reason to allow MSKCC to 

take distributions from the Captive. An 

essential purpose of this exemption is to 

ensure that Plan participants’ and 

beneficiaries’ pension benefits are as 

secure as possible. This objective is best 

achieved by ensuring that the assets 

formerly held in the Plan’s trust that 

will be transferred to the Captive as part 

of the Reinsurance Arrangement remain 

in the Captive’s reserves where they can 

be used to pay the retirement benefits of 

the participants and beneficiaries of this 

Plan. The Department notes that 

MSKCC does not provide any detail on 

the risk impact associated with allowing 

MSKCC to receive future distributions 

from the Captive. Furthermore, it is 

inappropriate for participants in another 

MSKCC-sponsored employee benefit 

plan to receive a portion of a dividend 

taken from the Captive before the 

Captive has satisfied all liabilities under 

the GAC. 

The Department also notes that 

MSKCC has consistently represented 

that the Captive will be funded on a 

break-even basis and that no excess 

assets are anticipated at the end of the 

Reinsurance Arrangement. If this is the 

case, then all Plan assets used to fund 

participant and beneficiary liabilities 

should remain in the Captive where 

they can be used to pay benefits to the 

participants and beneficiaries of this 

Plan—rather than as distributions to 

MSKCC and contributions to another 

plan. 

5. Factual Accuracy 

Condition (k) of the proposed 

exemption provides that ‘‘all the facts 

and representations set forth in the 

Summary of Facts and Representations 

must be true and accurate at all times.’’ 

The Applicant requests that section (k) 

be modified to state, ‘‘All the material 

facts and representations set forth in the 

Summary of Facts and Representations 

(as modified by the clarifications set 

forth in the comment letter submitted by 

the Applicant) must be true and 

accurate at all times;’’ 

The Department accepts the 

Applicant’s request to modify Section 

(k) in part. Instead of expanding section 

(k) to incorporate all modifications 

noted in the Applicant’s comment letter, 

the Department will expand Section (k) 

to incorporate all modifications from the 

proposed exemption, as detailed in this 

final exemption. Section (k) now states: 

‘‘All the material facts and 

representations set forth in the 

Background section of this exemption, 

including all modifications from the 

proposed exemption as detailed in this 

final exemption, must be true and 

accurate at all times[.]’’ 

6. Factual Clarifications 

Paragraph 6 of the proposed 

exemption’s Summary of Facts and 

Representations states, ‘‘the Plan would 

purchase the GAC from the Fronting 

Insurer by using current Plan assets 

(including an in-kind transfer) to pay a 

one-time premium amount to the 

Fronting Insurer... Subsequently, the 

Fronting Insurer would transfer the 

premium amount paid by the Plan to the 

Captive where it would be held in 

reserve within the captive cell (MSK EB) 

throughout the duration of the 

Reinsurance Arrangement.’’ 

MSKCC requests a clarification that 

the insurance premium and the 

reinsurance premium may be paid 

concurrently and that the Captive is 

expected to use the assets received as 

reinsurance premium to collateralize its 

obligations under the Reinsurance 

Arrangement, in each case with such 

modifications as the Fronting Insurer’s 

regulatory, accounting or commercial 

considerations may require. 

The Department accepts MSKCC’s 

requested clarification but notes that in 

its application MSKCC stated that: ‘‘The 

Fronter will purchase the reinsurance 

contract from MSK Insurance through a 

transfer from the Fronter to MSK 

Insurance of cash and, through an inkind transfer, assets previously 

transferred from the Pension Plan.’’ 


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15 29 CFR 2550.408(b)(2). 

Paragraph 8 of the proposed 

exemption’s Summary of Facts and 

Representations states that ‘‘as part of 

the Reinsurance Arrangement, the 

Captive would be collateralized by 

MSKCC, and all collateral will be 

separate and apart from the Plan assets 

used to purchase the GAC.’’ Further, the 

second sentence of paragraph 8 states 

that ‘‘collateral would be distinct from 

the reserves’’ and that ‘‘pursuant to the 

GAC, MSKCC would establish a 

collateral account that the Fronting 

Insurer can access: (1) in the event the 

Captive fails to make a required 

quarterly payment to the Fronting 

Insurer; or (2) to reduce the financial 

risk that would arise if, for example, the 

Captive is holding too large a portion of 

the reserves in illiquid investments.’’ 

Finally, the fourth sentence of 

paragraph 8 states that ‘‘the collateral 

requirements will be determined by the 

Fronting Insurer and will be based on 

the reserve requirements mandated by 

the State of Vermont.’’ 

MSKCC requests the following 

clarifications. First, to further support 

the Captive, MSKCC will capitalize the 

Captive in accordance with the 

requirements of the State of Vermont 

and will provide a guarantee for the 

benefit of the Fronting Insurer with 

respect to the Captive’s obligations, and 

those assets will be separate and apart 

from the Plan assets used to purchase 

the GAC. Second, the Fronter will be 

required to carry statutory reserves on 

its financial statements in such amounts 

as the insurance law in its state of 

domicile may require, and the collateral 

requirements will be based on those 

reserve requirements. Third, the 

Fronting Insurer will have the right to 

access the collateral assets in 

accordance with the Reinsurance 

Arrangement. Collateral assets will back 

the Captive’s reserves but will not be 

distinct from them. In addition, other 

assets of the Captive will support the 

Reinsurance Arrangement. 

Paragraph 6 of the proposed 

exemption states, ‘‘[t]he Fronting 

Insurer would assume full responsibility 

for benefit obligations to participants 

and beneficiaries, without conditions or 

caveats, and the Captive would assume 

the reinsurance risk.’’ However, 

paragraph 6 also states that ‘‘. . . both 

the Fronting Insurer and the Captive 

would assume full responsibility for 

making pension benefit payments to 

participants and beneficiaries . . . the 

Fronting Insurer and the Captive would 

remain 100 percent liable for making 

benefit payments to participants and 

beneficiaries.’’ 

The Applicant states that, while it is 

correct that both the Fronting Insurer 

and the Captive are fully obligated to 

satisfy the benefit obligations, paragraph 

6 of the Summary requires a technical 

modification in its description of the 

mechanism of those obligations. In this 

regard, (a) during the Buy-In Phase, the 

Fronting Insurer makes payments to the 

Plan; and (b) during the Buy-Out Phase, 

the Fronting Insurer makes benefit 

payments directly to participants and 

beneficiaries. During both phases, the 

Captive is fully obligated to make 

payments to the Fronting Insurer under 

the Reinsurance Arrangement. The 

Captive, thus, is fully obligated to 

satisfy the benefit obligations, but the 

mechanism of that obligation flows 

through the Fronting Insurer, rather 

than directly to participants and 

beneficiaries of the Plan. 

Department’s Response: The 

Department accepts MSKCC’s factual 

clarifications. 

7. Scope of Exemptive Relief 

Section II of the proposed exemption 

would grant relief only under ERISA 

sections 406(a)(1)(D) and 406(b)(1), (2), 

and (3) and the parallel provisions in 

Code section 4975(c)(1)(D), (E), and (F). 

MSKCC states that it is plausible that 

certain aspects of the Reinsurance 

Arrangement could constitute a 

prohibited transaction under ERISA 

sections 406(a)(1)(A), (B), and (C) (and 

the parallel provisions under Code Sec. 

4975). MSKCC requests that either (1) 

the exemption be expanded to provide 

relief under 406(a)(1)(A), (B), and (C), or 

(2) include an explanation from the 

Department that, in its view, the 

Reinsurance Arrangement (including 

the additional aspects to such 

arrangement described above) would 

not result in prohibited transactions 

under ERISA sections 406(a)(1)(A), (B), 

and (C) (and the parallel provisions 

under Code Sec. 4975), and thus no 

relief is needed for those sections. 

Department’s Response: The 

Department agrees with the Applicant’s 

request to expand the scope of relief 

under the exemption. The exemption 

now provides relief under ERISA 

sections 406(a)(1)(A), (B), and (D) and 

406(b)(1), (2), and (3) and the parallel 

provisions of the Code. However, with 

respect to ERISA section 406(a)(1)(C), 

the Department expects MSKCC and the 

Captive to comply with the statutory 

exemption codified in ERISA section 

408(b)(2) (and the regulations 

thereunder) for the provision of services 

to the Plan.15

II. Comments From Participants 

1. Why are participants and 

beneficiaries not receiving more? 

In their comment letters, several 

participants asked why they would not 

receive more than 51 percent of the 

savings MSKCC would realize through 

the Reinsurance Arrangement. One 

participant asked, ‘‘how was this 

number arrived at? Why couldn’t or 

shouldn’t the plan participants receive a 

higher percentage? Would MSKCC still 

pursue this plan if participants were to 

receive 90% of the benefit?’’ 

Department’s Response: The 

Department has crafted this exemption 

to ensure that: (1) plan participants and 

beneficiaries receive a greater financial 

benefit from the transaction than any 

financial savings or benefits accruing to 

MSKCC; and (2) the participants and 

beneficiaries are financially better off 

than they would have been in the 

absence of an exemption. The 

Department is granting this exemption, 

in large part, because the exemption 

meets these criteria. Moreover, the 

Department has no basis for believing 

that MSKCC would have agreed to give 

even greater benefits to the plan, its 

participants, and beneficiaries, much 

less 90 percent of all the cost savings 

associated with the captive 

arrangement. 

The Department continually 

requested that MSKCC increase the 

benefit enhancement provided under 

the exemption and the estimated 5.55 

percent benefit increase represents a 

substantial benefit enhancement for the 

Plan’s participants and beneficiaries 

that will provide an estimated 5.55 

percent increase in their monthly 

retirement annuity for the rest of their 

lives. As noted above, this benefit 

increase will result in an estimated 

$66,408,000 of additional benefits for 

participants and beneficiaries which 

will strengthen retirement security for 

these individuals. The Department also 

notes that this estimated 5.55 percent 

increase is consistent with the Primary 

Benefits Test used by the Department in 

its welfare benefit plan captive 

reinsurance cases. 

Moreover, the permanent 5.55 percent 

benefit increase is substantially more 

than MSKCC proposed to provide 

participants and beneficiaries when it 

submitted its exemption application to 

the Department. MSKCC initially 

proposed no benefit enhancements at 

all, arguing that the entirety of the 

financial benefit derived from using the 

Captive would inure to the Plan. The 

Department, however, pushed back on 

this position and argued that a discount 

on the purchase price of the GAC would 


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16 76 FR 66637, 66644 (October 27, 2011). 

financially benefit MSKCC, as the plan 

sponsor, and not the Plan because the 

participants’ and beneficiaries,’ whose 

monthly pension benefits are set 

according to the Plan’s benefit formula 

and would not be increased as a result 

of a discount to the group annuity 

purchase price. 

MSKCC subsequently amended its 

application to provide for the following 

two benefit enhancements: (1) a 

retirement planning program available 

upon election for participants and 

beneficiaries that would cost MSKCC 

$300 per election; and (2) an additional 

$2,000 incidental death benefit under 

the plan. The Department told MSKCC 

that these enhancements were 

insufficient for the Department to make 

its finding under ERISA section 408(a) 

and that it would not move forward 

with the exemption application unless 

MSKCC agreed to provide participants 

and beneficiaries with the majority of 

the financial benefits derived from using 

the Captive. 

Finally, the Department notes that 

absent this exemption, participants and 

beneficiaries would not receive any 

benefit increase when MSKCC 

terminates the plan and purchases a 

group annuity. 

2. Can the Fronting Insurer sell the GAC 

to another insurer? 

One participant asked whether the 

Fronting Insurer would be able to 

transfer or sell the GAC after the 

exemption is granted. The Department 

posed this question to MSKCC and 

received the following response: ‘‘The 

Fronting Insurer will commit 

irrevocably to provide the benefits 

under the terms of the contract and 

cannot sell the annuity to another 

insurance company. If the fronting 

insurer is itself bought by another 

insurance company or merges with 

another insurance company, the 

successor insurance company would 

also be bound by the contract’s 

obligations.’’ 

As a new condition of this exemption, 

the group annuity contract between the 

Fronting Insurer and the Plan must 

include language that unequivocally 

prohibits the Fronting Insurer from 

selling or otherwise transferring the 

GAC to another insurer. The Department 

notes that the appointment of an 

independent IB 95–1 Fiduciary to 

prudently select the Fronting Insurer 

and GAC is an essential part of this 

exemption and allowing the Fronter to 

sell the GAC to another insurer after the 

Plan’s acquisition of the GAC would not 

be protective of the participants and 

beneficiaries because the acquiring 

insurer might not meet the standards of 

IB 95–1. 

3. Will a lump sum distribution option 

be provided under the GAC? 

Two participants asked whether 

MSKCC will retain the lump sum 

distribution option currently provided 

under the Plan in the GAC. The 

Department referred this question to 

MKSCC, and they confirmed that the 

lump sum distribution option will be 

retained in the GAC. To ensure this is 

the case, the Department has added a 

new condition to the exemption that 

requires the GAC to include a lump sum 

distribution option for all participants 

and beneficiaries who have the right to 

receive a lump sum distribution under 

the terms of the Plan. 

III. Final Independent Fiduciary Report 

The Department has added a new 

Section III(i)(4) to provide specific 

requirements for the final Independent 

Fiduciary Report. In its final 

Independent Fiduciary Report, the 

Independent Fiduciary must determine 

that the plan termination, transfer of 

assets, and new contractual 

arrangements accord with all conditions 

of this exemption at the time of 

termination, and that it remains the case 

that the primary benefits of this 

arrangement are expected to go to the 

Plan’s participants and beneficiaries for 

the entire duration of the arrangement. 

The Independent Fiduciary must also 

represent that MSKCC has not managed 

plan assets in a way that results in 

MSKCC receiving a greater benefit from 

this arrangement than plan participants 

and beneficiaries. 

The complete application file (D– 

12073) is available for public inspection 

in the Public Disclosure Room of the 

Employee Benefits Security 

Administration, Room N–1515, U.S. 

Department of Labor, 200 Constitution 

Avenue NW, Washington, DC 20210. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption, please refer to the notice of 

proposed exemption published on July 

9, 2024, at 89 FR 56422. 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under ERISA 

section 408(a) does not relieve a 

fiduciary or other party in interest from 

certain requirements of other ERISA 

provisions, including but not limited to 

any prohibited transaction provisions to 

which the exemption does not apply 

and the general fiduciary responsibility 

provisions of ERISA section 404, which, 

among other things, require a fiduciary 

to discharge their duties respecting the 

plan solely in the interest of the plan’s 

participants and beneficiaries and in a 

prudent fashion in accordance with 

ERISA section 404(a)(1)(B). 

(2) As required by ERISA section 

408(a), the Department hereby finds that 

the exemption is: (a) administratively 

feasible for the Department; (b) in the 

interests of the Plan and the Plan’s 

participants and beneficiaries; and (c) 

protective of the rights of the Plan and 

the Plan’s participants and beneficiaries. 

(3) This exemption is supplemental 

to, and not in derogation of, any other 

ERISA provisions, including statutory or 

administrative exemptions and 

transitional rules. Furthermore, the fact 

that a transaction is subject to an 

administrative or statutory exemption is 

not dispositive for determining whether 

the transaction is in fact a prohibited 

transaction. 

(4) The availability of this exemption 

is subject to the express condition that 

the material facts and representations 

contained in the application accurately 

describe all material terms of the 

transactions that are the subject of the 

exemption and are true at all times. 

Accordingly, after considering the 

entire record developed in connection 

with the Applicant’s exemption 

application, the Department has 

determined to grant the following 

exemption under the authority of ERISA 

section 408(a) in accordance with the 

Department’s exemption procedures set 

forth in 29 CFR part 2570, subpart B: 16

Exemption 

Section I. Definitions 

(a) An ‘‘affiliate’’ of MSKCC, MSK US, 

or MSK EB includes: (1) any person or 

entity who controls MSKCC, MSK US, 

or MSK EB or is controlled by or under 

common control with MSKCC, MSK US, 

or MSK EB; (2) any officer, director, 

employee, relative, or partner with 

respect to MSKCC, MSK US, or MSK 

EB; and (3) any corporation or 

partnership of which a person described 

in (2) above in this paragraph is an 

officer, director, partner, or employee; 

(b) The term ‘‘Benefit Enhancement’’ 

means the benefit increase, as 

determined by the Independent 

Fiduciary based upon the Primary 

Benefits Test, that will be applied 

equally to all participants and 

beneficiaries across the Plan and last 

throughout the duration of the group 

annuity contract (the GAC) and 

Reinsurance Arrangement with no 

corresponding offsets or reductions; 


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(c) The term ‘‘Captive’’ means MSK 

Employee Benefits IC, Inc., a segregated 

cell within MSK Insurance US, Inc., a 

captive insurance and reinsurance 

subsidiary that is wholly-owned by 

MSKCC and domiciled in the state of 

Vermont. MSK Employee Benefits IC, 

Inc. will be used to reinsure the risks 

related to the Reinsurance Arrangement; 

(d) The term ‘‘control’’ means the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual; and 

(e) The term ‘‘Independent Fiduciary’’ 

means a person who: 

(1) Is not MSKCC or an affiliate of 

MSKCC, or the Captive and does not 

hold an ownership interest in MSKCC, 

the Captive, or their affiliates; 

(2) Was not a fiduciary with respect 

to the Plan before its appointment to 

serve as the Independent Fiduciary; 

(3) Has acknowledged in writing that: 

(i) It is a fiduciary and has agreed not 

to participate in any decision with 

respect to any transaction in which it 

has an interest that might affect its best 

judgment as a fiduciary; and 

(ii) Has appropriate technical training 

or experience to perform the services 

contemplated by this exemption; 

(4) For purposes of this definition, no 

organization or individual may serve as 

Independent Fiduciary for any fiscal 

year if the gross income received by 

such organization or individual from 

MSKCC, the Captive, or their affiliates 

for that fiscal year exceeds two percent 

of such organization’s or individual’s 

gross income from all sources for the 

prior fiscal year. This provision also 

applies to a partnership or corporation 

of which such organization or 

individual is an officer, director, or 10 

percent or more partner or shareholder 

and includes as gross income amounts 

received as compensation for services 

provided as an independent fiduciary 

under any prohibited transaction 

exemption granted by the Department; 

(5) No organization or individual that 

is an Independent Fiduciary and no 

partnership or corporation of which 

such organization or individual is an 

officer, director, or ten percent or more 

partner or shareholder may acquire any 

property from, sell any property to, or 

borrow any funds from MSKCC, the 

Captive, or their affiliates while the 

individual serves as an Independent 

Fiduciary. This prohibition will 

continue for a period of six months after 

the party ceases to be an Independent 

Fiduciary and/or the Independent 

Fiduciary negotiates any transaction on 

behalf of the Plan during the period that 

the organization or individual serves as 

an Independent Fiduciary; and 

(6) In the event a successor 

Independent Fiduciary is appointed to 

represent the interests of the Plan with 

respect to the subject transaction, no 

time should elapse between the 

resignation or termination of the former 

Independent Fiduciary and the 

appointment of the successor 

Independent Fiduciary. 

Section II. Covered Transactions 

This exemption provides relief from 

the prohibited transactions provisions of 

ERISA sections 406(a)(1)(A), (B), and 

(D), and 406(b)(1), (b)(2), and (b)(3), and 

the excise tax imposed by Code section 

4975(a) and (b) (due to the operation of 

parallel prohibited transaction 

provisions contained in Code section 

4975(c)(1) (A), (B), (D), (E), and (F)) with 

respect to: (1) the reinsurance of risks; 

and (2) the receipt of a premium by the 

Captive in connection with a single 

premium group insurance contract sold 

by an unrelated fronting insurer (the 

Fronting Insurer) to provide pension 

annuities to Plan participants and 

beneficiaries. To receive this relief, the 

conditions in Section III must be met in 

conformance with the definitions in 

Section I. 

Section III. Conditions 

(a) MSKCC must amend the Plan 

document to provide a universal benefit 

increase to all participants and 

beneficiaries that will apply 

immediately once the GAC is purchased 

and will continue with no reduction or 

offsets for the remainder of the 

participants and beneficiaries’ lives (the 

Benefit Enhancement). The additional 

benefit provided by the Benefit 

Enhancement to participants and 

beneficiaries must be greater than 51 

percent of the total benefit, including 

cost savings, derived by MSKCC from 

the Reinsurance Arrangement (the 

Primary Benefits Test). In addition, 

MSKCC must include an additional 

$1,968,000 in the GAC as a second-layer 

benefit increase that will further 

permanently increase the monthly 

pension benefit of all participants and 

beneficiaries covered by the Plan. This 

second layer benefit enhancement 

represents the present value of the 

expected Independent Fiduciary’s fees 

over the projected life of the GAC; 

(b) Following the Plan’s purchase of 

the GAC from the Fronting Insurer and 

the consummation of the Reinsurance 

Arrangement between the Fronting 

Insurer and the Captive, the 

Independent Fiduciary must prudently 

and loyally determine the Primary 

Benefits Test has been met. The 

Independent Fiduciary must submit its 

determination in writing to the 

Department within 30 days after the 

GAC is entered into. In this written 

determination, the Independent 

Fiduciary must confirm the actual cost 

savings associated with the Reinsurance 

Arrangement by obtaining 

documentation from the Fronting 

Insurer that compares the cost to 

purchase the GAC without the Captive 

in place to the cost to purchase the GAC 

with the Captive in place. The 

Independent Fiduciary must include 

this documentation from the Fronting 

Insurer with its written determination to 

the Department; 

(c) The Captive or MSK US Insurance 

US, Inc. must: 

(1) Be a party in interest with respect 

to the Plan based on an affiliation with 

MSKCC that is described in ERISA 

section 3(14)(G); 

(2) Be licensed to sell insurance or 

conduct reinsurance operations in 

Vermont; 

(3) Have obtained a Certificate of 

Authority from the Insurance 

Commissioner of Vermont to transact 

business as a captive insurance 

company and such certificate must not 

have been revoked or suspended; 

(4) Have undergone a financial 

examination (within the meaning of the 

law of its domiciliary State, Vermont) by 

the Insurance Commissioner of Vermont 

within five years before the end of the 

year preceding the year in which the 

reinsurance transaction occurred; 

(5) Have undergone, and continue to 

undergo, an examination by an 

independent certified public accountant 

for its last completed taxable year 

immediately before the taxable year of 

the Reinsurance Arrangement covered 

by this exemption; and 

(6) Be licensed to conduct reinsurance 

transactions by a state whose law 

requires an actuarial review of reserves 

to be conducted annually by an 

independent firm of actuaries and 

reported to the appropriate regulatory 

authority; 

(d) The Plan must pay no 

commissions with respect to the 

purchase of the GAC or the Reinsurance 

Arrangement; 

(e)(1) The Fronting Insurer and GAC 

must be selected by Fiduciary 

Counselors, an independent fiduciary to 

the Plan, in compliance with the 

Department’s Interpretive Bulletin 95–1 

(29 CFR 2509–95–1). Within 30 days 

after the GAC is entered into, Fiduciary 

Counselors must submit a written report 

to the Department that identifies the 

Fronting Insurer selected, details the 

methodology used to select the Fronting 

Insurer, and explains how Fiduciary 

Counselors determined that the selected 

Fronting Insurer and GAC meet the 


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requirements of IB 95–1. Fiduciary 

Counselors must also represent in 

writing to the Department that it would 

have been consistent with IB 95–1 to 

select the Fronting Insurer as the insurer 

for a final termination buy-out annuity 

had MSKCC adopted that approach. To 

meet its fiduciary responsibility owed to 

the Plan’s participants and beneficiaries 

to select and purchase the ‘‘safest 

available annuity,’’ before selecting the 

Fronting Insurer, Fiduciary Counselors 

must evaluate such insurer’s claimspaying ability and creditworthiness in 

full compliance with guidance provided 

in the Department’s Interpretive 

Bulletin 95–1; 

(f) (1) The Reinsurance Arrangement 

between MSK US and the Fronting 

Insurer must be indemnity insurance 

only and must not relieve the Fronting 

Insurer from any responsibility or 

liability to the Plan’s participants and 

beneficiaries, including any liability 

that would result if MSK US fails to 

meet any of its contractual obligations to 

the Fronting Insurer or any successor 

Fronting Insurer under the Reinsurance 

Arrangement; 

(2) The Fronting Insurer must have a 

direct contractual relationship with the 

Plan during the Buy-In phase of the 

GAC and with the Plan’s participants 

and beneficiaries after MSKCC exercises 

the Conversion Option under the GAC 

when it terminates the Plan, without 

any caveats, contingencies, or 

conditions that would relieve or limit 

the Fronting Insurer’s contractual 

obligation to pay benefits to the Plan’s 

participants and beneficiaries in 

accordance with the Plan and the terms 

of this exemption; 

(g) MSKCC must not offset or reduce 

any benefits provided to Plan 

participants and beneficiaries in relation 

to its implementation of the Benefit 

Enhancement at any time. In this regard, 

MSKCC must not implement any benefit 

cuts or offsets of any kind to the benefits 

the Plan provides to any Plan 

participant or beneficiary; 

(h) The Independent Fiduciary must: 

(1) In compliance with its fiduciary 

obligations of prudence and loyalty 

under ERISA sections 404(a)(1)(A) and 

(B): (i) review the Reinsurance 

Arrangement and the terms of the 

exemption; (ii) obtain and review all 

current objective, reliable, third-party 

documentation necessary to make the 

determinations required of the 

Independent Fiduciary by the 

exemption; and (iii) confirm in writing 

that all of the exemption’s terms and 

conditions have been met (or, due to 

timing requirements, can reasonably be 

expected to be met consistent with the 

terms of the exemption) and send this 

confirmation to the Department’s Office 

of Exemption Determinations not later 

than 30 days after the Captive enters 

into the Reinsurance Arrangement. In 

this written report, the Independent 

Fiduciary must also confirm that the 

Fronting Insurer and GAC selected, and 

the methodology used by Fiduciary 

Counselors to make the selection, meet 

the requirements of IB 95–1 and that it 

would have been consistent with IB 95– 

1 to select the Fronting Insurer as the 

insurer for a final termination buy-out 

annuity had MSKCC adopted that 

approach; 

(2) Approve the Reinsurance 

Arrangement in advance and ensure that 

the Reinsurance Arrangement is in the 

interest of the Plan’s participants and 

beneficiaries and protective of the Plan’s 

participants and beneficiaries; 

(3) As long as the Plan remains active, 

monitor, enforce, and ensure 

compliance with all conditions of this 

exemption in accordance with its 

obligations of prudence and loyalty 

under ERISA sections 404(a)(1)(A) and 

(B), including all conditions and 

obligations imposed on any party 

dealing with the Plan, throughout the 

period during which the Captive’s assets 

are directly or indirectly used in 

connection with a transaction covered 

by this exemption; 

(4) Represent and protect the interests 

of the participants and beneficiaries of 

the Plan when the plan is active during 

the Buy-In Phase to ensure they receive 

everything that they are entitled to 

receive under this exemption, the terms 

of the Plan, and the GAC; 

(5) Monitor and ensure that any assets 

that remain in the Plan during the BuyIn Phase of the Reinsurance 

Arrangement are managed and used 

exclusively to provide benefits to Plan 

participants and beneficiaries and to 

defray reasonable expenses of 

administering the Plan in compliance 

with ERISA sections 403(c)(1) and 

404(a)(1)(A); 

(6) Report any instance of noncompliance immediately to the 

Department’s Office of Exemption 

Determinations until the Plan is 

terminated; 

(7) Take all appropriate actions to 

safeguard the interests of the Plan and 

its participants and beneficiaries until 

the Plan is terminated; and 

(8) Review all contracts pertaining to 

the Reinsurance Arrangement, and any 

renewals of such contracts, to determine 

whether the requirements of this 

exemption and the terms of Benefit 

Enhancement continue to be satisfied 

until the Plan is terminated; 

(i)(1) The Independent Fiduciary must 

submit annual Independent Fiduciary 

Reports to the Department’s Office of 

Exemption Determinations as long as 

the plan remains active, certifying under 

penalty of perjury whether each term 

and condition of the exemption has 

been met over the applicable period. 

Each Report must be completed within 

six months after the end of the twelvemonth period to which it relates (the 

first twelve-month period would begin 

on the effective date of the exemption 

grant); and submitted to the 

Department’s Office of Exemption 

Determinations within 60 days 

thereafter; 

(2) In preparing the Independent 

Fiduciary Report, the Independent 

Fiduciary must: 

(i) Review the Captive’s annual audit 

and actuarial reports as submitted to the 

Vermont Department of Financial 

Regulation (Vermont DFR); 

(ii) Review any Certificate of Good 

Standing received by the Captive; 

(iii) Review any Exam Report 

completed by the Vermont DRF and 

include a detailed summary of the Exam 

Report; 

(iv) Confirm that MSKCC has not 

reduced or offset any benefits in relation 

to its implementation of the Benefit 

Enhancement; and 

(v) Confirm that MSKCC has not 

reduced the Benefit Enhancement 

amount at any point during the year 

covered. 

(3) The Independent Fiduciary must 

confirm in each Report that the Primary 

Benefits Test was met for the covered 

year. In this regard, the Independent 

Fiduciary must determine the value of 

the Benefit Enhancement and the total 

value of the Reinsurance Arrangement 

to MSKCC, including cost savings, and 

confirm that MSKCC has not received 

any additional financial benefit that the 

Independent Fiduciary did not account 

for when it previously used the Primary 

Benefits Test to derive the Benefit 

Enhancement amount; 

(4) In its final independent fiduciary 

report, the Independent Fiduciary must 

determine that the plan termination, 

transfer of assets, and new contractual 

arrangements accord with all conditions 

of this exemption at the time of 

termination, and that it remains the case 

that the primary benefits of this 

arrangement are expected to go to the 

plan for the entire duration of the 

arrangement. The Independent 

Fiduciary must also represent that 

MSKCC has not managed plan assets in 

a way that results in MSKCC receiving 

a greater benefit from this arrangement 

than plan participants and beneficiaries; 

(j) Neither MSKCC nor any related 

entity may use participant or 

beneficiary-related data or information 


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Federal Register / Vol. 90, No. 9 / Wednesday, January 15, 2025 / Notices 3957 

generated by or derived from the 

Reinsurance Arrangement for purposes 

unrelated to the administration, 

funding, or security of the GAC, 

Reinsurance Arrangement, or Plan; 

(k) All the material facts and 

representations set forth in the 

Background section of this exemption, 

including all modifications from the 

proposed exemption as detailed in this 

final exemption, must be true and 

accurate at all times; 

(l) No party related to this exemption 

request has or will indemnify the 

Independent Fiduciary or the IB 95–1 

Independent Fiduciary, in whole or in 

part, for negligence and/or for any 

violation of state or federal law that may 

be attributable to the Independent 

Fiduciary’s or IB 95–1 Independent 

Fiduciary’s performance of its duties in 

connection with the Reinsurance 

Arrangement. In addition, no contract or 

instrument may purport to waive any 

liability under state or federal law for 

any such violations; 

(m) MSKCC must provide the 

Department’s Office of Exemption 

Determinations with all Exam Reports 

issued by the State of Vermont 

throughout the duration of the 

Reinsurance Arrangement within 30 

days after such Exam Report is received; 

(n) The Captive must request a 

Certificate of Good Standing from the 

State of Vermont on an annual basis; 

(o) MSKCC must notify the 

Department’s Office of Exemption 

Determinations if there is any change in 

the Captive’s business plan, auditor, or 

the composition of its board of directors; 

(p) MSKCC may not receive a 

dividend or any other form of 

distribution from the Captive at any 

point during the Reinsurance 

Arrangement; 

(q) MSKCC and the Captive must 

maintain all the records necessary to 

demonstrate that the conditions of this 

exemption have been met for a period 

of six years from the date of each record. 

MSKCC must provide these records to 

the Department’s Office of Exemption 

Determinations within 30 days from the 

date of a request by the Department; 

(r) MSKCC must provide a Parental 

Guarantee to the Captive and provide 

cash as needed if the Captive’s general 

and separate account asset balances 

have been extinguished; 

(s) The Captive must invest the 

reserves in accordance with the 

regulations and under the supervision of 

the State of Vermont; 

(t) MSKCC must amend the Plan 

document to memorialize the Benefit 

Enhancement and provide a copy of the 

amended plan document to the 

Department’s Office of Exemption 

Determinations no later than 30 days 

after the date the Captive enters into the 

Reinsurance Arrangement; 

(u) After the Buy-In phase for the 

Reinsurance Arrangement is completed 

and MSKCC exercises the Conversion 

Option, MSKCC will terminate the Plan 

in compliance with all applicable Code 

and ERISA requirements; 

(v) MSKCC must notify the 

Department of any change in the 

Independent Fiduciary no later than 30 

days after the engagement of a substitute 

or subsequent Independent Fiduciary 

and must explain the substitution or 

change, including a description of any 

material disputes between the 

terminated Independent Fiduciary and 

MSKCC; 

(w) Once the Benefit Enhancement 

percentage amount is set (in conformity 

with the Primary Benefits Test), MSKCC 

may not reduce that Benefit 

Enhancement percentage amount at any 

point; 

(x) The GAC between the Fronting 

Insurer and the Plan must include 

language that unequivocally prohibits 

the Fronting Insurer from selling or 

otherwise transferring the GAC to 

another insurer; and 

(y) The GAC must include a lump 

sum distribution option for all 

participants and beneficiaries who have 

the right to receive a lump sum 

distribution under the Plan. 

Effective Date: This exemption is in 

effect on January 15, 2025. 

Signed at Washington, DC. 

George Christopher Cosby, 

Director, Office of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2025–00813 Filed 1–14–25; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

Agency Information Collection 

Activities; Comment Request; 

Unemployment Insurance (UI) Data 

Validation (DV) Program 

ACTION: Notice. 

SUMMARY: The Department of Labor’s 

(DOL) Employment and Training 

Administration (ETA) is soliciting 

comments concerning a proposed 

extension for the authority to conduct 

the information collection request (ICR) 

titled, ‘‘Unemployment Insurance (UI) 

Data Validation (DV) Program.’’ This 

comment request is part of continuing 

Departmental efforts to reduce 

paperwork and respondent burden in 

accordance with the Paperwork 

Reduction Act of 1995 (PRA). 

DATES: Consideration will be given to all 

written comments received by March 

17, 2025. 

ADDRESSES: A copy of this ICR with 

applicable supporting documentation, 

including a description of the likely 

respondents, proposed frequency of 

response, and estimated total burden, 

may be obtained free by contacting India 

Oliver by telephone at 202–693–3020 

(this is not a toll-free number), or by 

email at OUI-PRA@dol.gov. For persons 

with a hearing or speech disability who 

need assistance to use the telephone 

system, please dial 711 to access 

telecommunications relay services. 

Submit written comments about, or 

requests for a copy of, this ICR by mail 

or courier to the U.S. Department of 

Labor, Employment and Training 

Administration, Office of 

Unemployment Insurance, Room S– 

4519, 200 Constitution Avenue NW, 

Washington, DC 20210; by email: OUIPRA@dol.gov; or by fax 202–693–3975. 

FOR FURTHER INFORMATION CONTACT: 

India Oliver by telephone at 202–693– 

3020 (this is not a toll-free number) or 

by email at OUI-PRA@dol.gov. 

SUPPLEMENTARY INFORMATION: DOL, as 

part of continuing efforts to reduce 

paperwork and respondent burden, 

conducts a pre-clearance consultation 

program to provide the general public 

and Federal agencies an opportunity to 

comment on proposed and/or 

continuing collections of information 

before submitting them to the Office of 

Management and Budget (OMB) for final 

approval. This program helps to ensure 

requested data can be provided in the 

desired format, reporting burden (time 

and financial resources) is minimized, 

collection instruments are clearly 

understood, and the impact of collection 

requirements can be properly assessed. 

Section 303(a)(6) of the Social 

Security Act specifies that the Secretary 

of Labor will not certify State UI 

programs to receive administrative 

grants unless the State’s law includes 

provisions for ‘‘making of such reports 

. . . as the Secretary of Labor may from 

time to time require, and compliance 

with such provisions as the Secretary 

may from time to time find necessary to 

assure the correctness and verification 

of such reports.’’ DOL considers DV to 

be one of those ‘‘provisions . . . 

necessary to assure the correctness and 

verification’’ of the reports submitted by 

states that authorizes this information 

collection. 

The Government Performance and 

Results Act of 1993 (GPRA) requires 


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