January 31, 2023

Morningstar Investment Management and PAi's ESG Pooled Employer Plan Goes Live

As investors demand more personalized investing, the Morningstar ESG PEP empowers small and medium-sized companies to offer an ESG investment lineup to their employees

CHICAGO, Jan. 31, 2023 /PRNewswire/ -- Morningstar Investment Management LLC's Retirement Solutions Group, a subsidiary of Morningstar, Inc. (Nasdaq: MORN), and Plan Administrators, Inc. (PAi), a retirement plan administrator and recordkeeper, are releasing the Morningstar® ESG Pooled Employer Plan today, which is designed to select funds that limit exposure to material environmental, social, and governance (ESG) risks. The launch of the PEP follows the final rule from the U.S. Department of Labor on the use of ESG information to select investments for retirement plans, effective Jan. 30, 2023.

"The Department of Labor ruling is a great win for employers and advisors as it gives them options to choose investments that not only provide an appropriate diversification and return profile but also gets employees engaged with their retirement savings and comfortable that their investments are being mitigated against long-term ESG risk. We selected the PEP format for this offering as it levels the playing field for companies that do not have access to or cannot afford to hire specialized advisors and experts to help them select and manage ESG options," said Brock Johnson, president of Global Retirement and Workplace Solutions at Morningstar Investment Management.

Morningstar Investment Management will serve as the 3(38) investment manager on PEP, while PAi Trust Co. will oversee the plan as the pooled plan provider. The PEP will be offered on PAi's CoPilot recordkeeping platform that focuses on outcomes by engaging participants using event-based alert messages. In addition to those timely alerts and nudges, CoPilot provides a Years of Retirement tool that shows participants how many years their savings will last, not just how many dollars they have saved.

"With the rollout of PEPs, there is now a retirement vehicle available that can help to reduce some of the employer's fiduciary responsibilities, making it easier for small business owners to offer a 401(k) to their employees," said Amy Hermann, director of sales and marketing of PAi. "This PEP creates an ideal, specialized structure—with access to the Morningstar expertise, data, and selection process—that is especially useful for investors focused on ESG. Working with Morningstar Investment Management will help employers meet the needs of their employees with a lineup that would otherwise be difficult for a plan sponsor or advisor to recreate and manage themselves."

The methodology for the Morningstar ESG PEP is available here. Morningstar Investment Management will select and manage the investment lineup for the Morningstar ESG PEP, using the same qualitative and quantitative processes it uses to oversee the investments in 21,756 plan lineups (as of Q3 2022) as part of its 3(38) and 3(21) fiduciary service. For the PEP, Morningstar Investment Management complements that with an additional ESG analysis that includes both manager interviews and a review of each fund's Morningstar Sustainability Rating. This approach is supported by PAi's open architecture platform, which allows Morningstar Investment Management to consider a wide range of investments.

Morningstar Investment Management has also designed a custom target-date model for this PEP that uses the underlying investment lineup. The model will serve as the target-date investment and can be used as the default investment option.  

More information about the Morningstar ESG PEP is available here.

About Morningstar, Inc.  
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $239 billion in assets under advisement and management as of September 30, 2022. The Company has operations in 29 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

About Morningstar Investment Management LLC's Retirement Solutions Group   
Our parent company, Morningstar, Inc., was founded on the simple idea that when people have good investment information, they can make better choices that help them achieve their financial goals. In the retirement solutions group at Morningstar Investment Management LLC, a subsidiary of Morningstar, Inc. and a registered investment adviser, our advocacy for the individual investor extends to the workplace retirement market where the responsibility for investing and saving now rests with employees. Our products and services—which range from a managed accounts service to target-date products to custom models and fiduciary services—are not only designed to help people save for the retirement they want, but to help them make their money last once they get there.

About PAi 
Since 1983, PAi has helped people successfully save for retirement by changing retirement outcomes with participant-focused, easy-to-manage 401(k) retirement services. As an Ascensus company since 2022, we continue to focus on serving employers, their employees, and financial representatives to create a better retirement for all. CoPilot's recordkeeping services feature Years of Retirement calculations, allowing savers to see exactly how many years their savings can buy, and an event-based alert system that keeps participants on track by sending updates along the way. See how CoPilot is changing the retirement conversation: pai.com.

Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission. Ratings are statements of opinions, subject to change, are not to be considered as guarantees, and should not be used as the sole basis for investment decisions.  

©2023 Morningstar, Inc. All Rights Reserved.


Morningstar Media Contact:  
Erin Parro, +1 312-696-6037, newsroom@morningstar.com 

PAi Media Contact: 
Cheryl Bikowski, +1 920-278-4657, cdbikowski@pai.com  


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