No investments allowed by religion in plan--allowed?

Plan has a few participants whose religion precludes them from investing in any of the plan's alternatives.

There are several hundred active participants.

What duty, if any, do the fiduciaries/trustees have to include a fund/funds that would be eligible under a haram/halal investing strategy?

It is quite a niche corner of the investing world (at least here in the US), and funds can go from performing to underperforming quite rapidly quarter over quarter.

Would the these participants have some sort of religious discrimination claim if these types of investments are not offered?

just on a fact-finding mission for now.  I sent the plan sponsor to their attorney, but I'd like to get the community's take on this.

Does this previous discussion help? Oh, look who started the thread!

By the way, I still stand by my recommendation:  do nothing, or use the default investment.  The plan is doing the investing, not the individual.

Dude, that was like almost 5 years ago!

But I did forget about it.  And there was no overall consensus.

Thanks for the reminder.

I would think the fiduciaries would have a duty to monitor the investments.

Is it possible to have self directed brokerage window or mutual fund window that might allow such participants the opportunity to invest in funds that meet their Religious desires while still limiting the fiduciaries legal exposure should those investment be shall we say "sub par performers"?

For such a big plan, I doubt is would be feasible.  If you offer it to one, you have to offer it to all.

Here’s a more recent BenefitsLink discussion with some different observations: https://benefitslink.com/boards/topic/69943-religious-exemption-from-plan-participation/.

If a plan’s menu already is broad enough and prudently selected and arranged, adding another investment alternative because some participants want it might be no breach if the fiduciary prudently finds that the availability of that alternative does not harm other participants.

As always, a plan’s fiduciary will want its lawyer’s advice.

3 hours ago, BG5150 said:

What duty, if any, do the fiduciaries/trustees have to include a fund/funds that would be eligible under a haram/halal investing strategy?

There was a journal article in JPB 9-10 years ago on ERISA and Sharia.  The author was someone at DOL.  As I recall it was a very good article.  

I know I have a hard copy somewhere, but I'm pretty sure I have a pdf as well...  I'll see if I can find it for you.

Asrar Ahmed, ERISA and Sharia Law, 21-1 Journal of Pension Benefits 5-13 (Autumn 2013).

Among the article’s observations: “ERISA Section 404(c) provides an opportunity to relinquish the burden of investment decision-making and a defense to a claim of fiduciary breach that allows a plan fiduciary to limit his exposure to liability by shifting the responsibility of directing the investments to the participant.”

BenefitsLink neighbors, if you subscribe to a Wolters Kluwer VitalLaw® suite, the Journal of Pension Benefits, including back issues, might be in your subscription.

Over the past 11 years, Asrar Ahmed has steadily risen in the U.S. Labor department.

Also check your local public library - mine, for example, subscribes to EBSCOhost, through which I have access to the Journal of Pension Benefits, among many, many other publications.

And alumni privileges with your college or university.

BG5150, I have not looked into this, but I would point out that while ERISA preempts most state laws that relate to employee benefit plans, it does not preempt other Federal laws. The basis for most of the Supreme Court's decisions over the last decade or so ago that have expanded individuals' rights to the free exercise of their religion (e.g., an employer's not being able to fire an employee for wearing particular clothing or facial hair at work, or refusing to work on certain holy days) is not the First Amendment's antiestablishment clause, but the Federal Religious Freedom Restoration Act which, per Wikipedia,

applies "to all Federal law, and the implementation of that law, whether statutory or otherwise", including any Federal statutory law adopted after the RFRA's date of signing "unless such law explicitly excludes such application."

Therefore, it seems possible that a participant in an ERISA-covered plan has a right to have the plan's rules be harmonized with his/her/their religious beliefs.

I can't remember the last time I saw a recordkeeper's platform list that lacked funds that advertised Sharia compliance, a Christian focus, and other religious themes.

Meeting a participant's interest might be less expensive than learning what duties might exist and how they might apply.

I am with Peter here.  I am pretty sure any platform of any size has funds that meet most major religion's needs.    This seems simple to solve and not solving almost take a conscious decision on part of the plan administrators to just be stubborn.

This is one of those interesting topics in benefits law and I do not believe there is a clear answer. I would note the following: In addition to hiring and employment generally, the Supreme Court has determined that Title VII of the Civil Rights Act is also applicable to employee benefits.(see Los Angeles Department of Water and Power v. Manhart; Arizona Governing Commission v. Morris, and Gilbert v. General Electric. See also Moran, supra at 35.) Though there appears to be no cases out of the EEOC or the courts as to whether Title VII would require an employer to provide faith-based investment options within a company’s retirement plan if requested by an employee, Beverly Moran, a law professor at Vanderbilt University who has written extensively on this issue argues that when religious accommodation collides with tax preferences offered through the Internal Revenue Code, the courts generally give Congress great deference when it bestows tax benefits in exchange for taxpayers avoiding even constitutionally protected activities. (See Beverly I. Moran, “The Right to Religious Accommodations in Pension Plans”, 2012 Cornell HR Review.) An example of such a case involved Bob Jones University where the Supreme Court held that the University was not entitled to retain its tax-exempt status based on its practice of racial discrimination.36 The Court suggested that even religious schools are not exempt charities when they practice racial discrimination. (See Bob Jones University v. Unites States, 461 U.S. 574 (1993)).Thus, I believe Prof. Moran would argue that a plan fiduciary should be required to add a faith-based investment alternative to a tax-qualified retirement plan at the request of an employee because an employer should not be allowed to practice potential religious discrimination in light of the tax benefits the employer and the qualified retirement plan receives.

Not sure if this will help, be a reminder to the client that holding a security of a given company does not effect that company's profitability. Buying their products or services does that. The election to hold or avoid a company securities tends to be psychological, which is indeed real, but it is not material.