61736 Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / Rules and Regulations 

analysis showed that the investment 

alternatives were of equal value. 

Examples: 

A plan owns an interest in a limited 

partnership that is considering investing 

in a company that competes with the 

plan sponsor. The fiduciaries may not 

replace the limited partnership 

investment with another investment 

based on this fact unless they prudently 

determine that a replacement 

investment is economically equal or 

superior to the limited partnership 

investment and would not adversely 

affect the plan’s investment portfolio, 

taking into account factors including 

diversification, liquidity, risk and 

expected return. The competition of the 

limited partnership with the plan 

sponsor is a factor outside the economic 

interests of the plan, and thus cannot be 

considered unless an alternative 

investment is equal or superior to the 

limited partnership. 

A multiemployer plan covering 

employees in a metropolitan area’s 

construction industry wants to invest in 

a large loan for a construction project 

located in the same area because it will 

create local jobs. The plan has taken 

steps to ensure that the loan poses no 

prohibited transaction issues. The loan 

carries a return fully commensurate 

with the risk of nonpayment. Moreover, 

the loan’s expected return is equal to or 

greater than construction loans of 

similar quality that are available to the 

plan. However, the plan has already 

made several other loans for 

construction projects in the same 

metropolitan area, and this loan could 

create a risk of large losses to the plan’s 

portfolio due to lack of diversification. 

The fiduciaries may not choose this 

investment on the basis of the local job 

creation factor because, due to lack of 

diversification, the investment is not of 

equal economic value to the plan. 

A plan is considering an investment 

in a bond to finance affordable housing 

for people in the local community. The 

bond provides a return at least as 

favorable to the plan as other bonds 

with the same risk rating. However, the 

bond’s size and lengthy duration raises 

a potential risk regarding the plan’s 

ability to meet its predicted liquidity 

needs. Other available bonds under 

consideration by the plan do not pose 

this same risk. The return on the bond, 

although equal to or greater than the 

alternatives, would not be sufficient to 

offset the additional risk for the plan 

created by the role that this bond would 

play in the plan’s portfolio. The plan’s 

fiduciaries may not make this 

investment based on factors outside the 

economic interest of the plan because it 

is not of equal or greater economic value 

to other investment alternatives. 

A plan sponsor adopts an investment 

policy that favors plan investment in 

companies meeting certain 

environmental criteria (so-called 

‘‘green’’ companies). In carrying out the 

policy, the plan’s fiduciaries may not 

simply consider investments only in 

green companies. They must consider 

all investments that meet the plan’s 

prudent financial criteria. The 

fiduciaries may apply the investment 

policy to eliminate a company from 

consideration only if they appropriately 

determine that other available 

investments provide equal or better 

returns at the same or lower risks, and 

would play the same role in the plan’s 

portfolio. 

A collective investment fund, which 

holds assets of several plans, is designed 

to invest in commercial real estate 

constructed or renovated with union 

labor. Fiduciaries of plans that invest in 

the fund must determine that the fund’s 

overall risk and return characteristics 

are as favorable, or more favorable, to 

the plans as other available investment 

alternatives that would play a similar 

role in their plans’ portfolios. The 

fund’s managers may select investments 

constructed or improved with union 

labor, after an economic analysis 

indicates that these investment options 

are equal or superior to their 

alternatives. The managers will best be 

able to justify their investment choice 

by recording their analysis in writing. 

However, if real estate investments that 

satisfy both ERISA’s fiduciary 

requirements and the union labor 

criterion are unavailable, the fund 

managers may have to select 

investments without regard to the union 

labor criterion. 

Signed at Washington, DC, this 9th day of 

October 2008. 

Bradford P. Campbell, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

[FR Doc. E8–24551 Filed 10–16–08; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 3 

RIN 2900–AM28 

Accrued Benefits; Correction 

AGENCY: Department of Veterans Affairs. 

ACTION: Correcting amendment. 

SUMMARY: This document contains a 

minor correction to the final regulations 

that the Department of Veterans Affairs 

(VA) published in 71 FR 78368 on 

December 29, 2006. The regulation 

relates to the Payment of Benefits to 

Survivors of Estates of Deceased 

Beneficiaries. No substantive change to 

the content of the regulation is being 

made by correcting this amendment. 

DATES: Effective Date: October 17, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Denise Kemp-Nichols, Regulations Staff 

(211D), Compensation and Pension 

Service, Veterans Benefits 

Administration, Department of Veterans 

Affairs, 810 Vermont Avenue, NW., 

Washington, DC 20420, (202) 461–9724. 

SUPPLEMENTARY INFORMATION: VA 

published a final rule in the Federal 

Register on December 29, 2006 (See 71 

FR 78368) revising its final rule 

eliminating the 2-year limitation on 

accrued benefits. In that document, VA 

failed to amend 38 CFR 3.816(f)(2). This 

document corrects that error by 

removing the entire first sentence of 38 

CFR 3.816(f)(2) and in the second 

sentence, by removing the word ‘‘also’’ 

after words ‘‘accrued benefits.’’ 

List of Subjects in 38 CFR Part 3 

Administrative, practice and 

procedures, Claims, Disability benefits, 

Health care, Pensions, Veterans, 

Vietnam. 

Approved: October 10, 2008. 

William F. Russo, 

Director of Regulations Management. 

■ For the reason set out in the preamble, 

VA is correcting 38 CFR part 3 as 

follows. 

PART 3—ADJUDICATION 

■ 1. The authority citation for part 3, 

subpart A continues to read as follows: 

Authority: 38 U.S.C. 501(a), unless 

otherwise noted. 

§ 3.816 [Corrected] 

■ 2. In § 3.816, paragraph (f)(2) is 

amended by removing the entire first 

sentence and in the second sentence 

removing the word ‘‘also’’. 

[FR Doc. E8–24650 Filed 10–16–08; 8:45 am] 

BILLING CODE 8320–01–P 


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