CFO Focus: Best practices in benefits pre-funding

first_img 8SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr More than 10 years ago, National Credit Union Administration Rule 701.19 went into effect. It gave federally chartered credit unions the ability to purchase investments that would otherwise be impermissible under parts 703 and 704 of NCUA’s rules and regulations, as long as these investments directly relate to the credit unions’ obligation or future obligation to support employee benefit plans, including such things as health insurance and 401(k) plans.Over the years, there hasn’t been much discussion about the regulatory expectations, which include board oversight and approval of a credit union’s associated investment policy used to fund the pre-funding plan. This is due in large part to the Great Recession, which occurred shortly after 701.19’s implementation. At the time, the financial crisis dampened credit unions’ interest in new types of investments.Now, with the improving economic environment and the increasing need to retain and attract top talent, credit union interest in investments with higher yields to help improve employee benefits has grown. So has regulator interest. Examiner directives related to lack of due diligence and/or board and management oversight on pre-funding arrangements are now much more prevalent.In the current environment, we suggest credit unions take three steps: continue reading »last_img

Leave a Reply

Your email address will not be published. Required fields are marked *