On December 21, 2007, the Labor Department issued a new advisory opinion addressing the controversial issue of proxy activity by ERISA-governed plans. In Advisory Opinion 2007-07A, issued to the U.S. Chamber of Commerce (click here for a copy), DOL considered the use of plan assets by plan fiduciaries to further public policy debates and political activities through proxy resolutions for businesses in which the plan is invested. DOL reiterated its view in Interpretive Bulletin 94-2 that investment activity intended to monitor or influence the management of a corporation in which a plan owns shares is consistent with the plan fiduciary’s obligations under ERISA only if that fiduciary concludes there is a reasonable expectation that the activities, undertaken by the plan alone or in conjunction with others, likely will enhance the economic value of the plan’s investment in an amount sufficient to outweigh the costs involved. In DOL’s view, plan fiduciaries may not increase plan expenses, dilute investment returns, or reduce the security of plan benefits to support or promote goals not directly related to the plan, and specifically to the plan purposes of paying benefits to participants and beneficiaries and defraying reasonable plan administrative expenses. Accordingly, DOL opined that the use of plan assets to further policy or political issues through proxy resolutions that have no nexus to enhancing the value of the plan’s investment in the corporation would violate ERISA. DOL gave as a specific example a proxy resolution requiring corporate directors and officers to disclose their personal political contributions, which DOL concluded was sufficiently remote from the enhancement of shareholder value to raise ERISA compliance concerns.