CHICAGO, March 16, 2016 /PRNewswire/ -- The Plan Sponsor Council of America (PSCA) is preparing for the expected release of the Department of Labor's final fiduciary standard definition.
The Department of Labor (DOL) first proposed the new fiduciary standard in 2010 and then submitted a revised proposal early in 2015. The rule would require retirement advisers to abide by a "fiduciary" standard and act in their clients' exclusive best interest. After considering industry comments, the DOL submitted their final version to the Office of Management and Budget in January for review. While the exact date is unknown, the DOL is expected to issue the final rule very soon—perhaps as early as this week.
"As the leading association for sponsors of voluntary, employer-based retirement plans, PSCA supports the core approach of the proposed rule in extending the protection of ERISA's fiduciary standards, adding further protections for plan sponsors," said Rich McHugh, Vice President of Washington Affairs. "However, our members have concerns regarding the rule's impact on the availability of plan education and advice, particularly to small companies. Striking the proper balance between extending protections without impacting availability and quality of services to sponsors and participants is very important."
In comment letters submitted to the DOL in 2015 (July 21st, September 24th) and in testimony from PSCA's Board Chairman, Steve McCaffrey, PSCA has stated that it supports the view that extending ERISA's protections in situations that function in a fiduciary capacity would provide meaningful protection for both plan participants and plan sponsors.
"We believe our country's retirement system will be greatly strengthened by ensuring that investment advice is provided in the recipient's best interest and that any financial conflicts are disclosed. While we appreciate and support the DOL's efforts to protect plan participants by extending ERISA's fiduciary standards in appropriate circumstances, this objective should be met without compromising the ability of plan sponsors to obtain the broad array of services that fit the needs of their plan participants," stated McCaffrey in testimony to the DOL.
PSCA expressed the following concerns to the DOL:
- Potential disproportionate impact on small plans – PSCA encouraged the DOL to consider the rule's potential impact on small plans and to avoid applying it in a way that might make fee structures onerous or deny education for small-plan participants due to high cost. PSCA encouraged the DOL to extend several exemptions to small plans, arguing that small does not necessarily mean unsophisticated.
- Potential impact on participant education – PSCA believes that the DOL should ensure the preservation of a robust participant investment education program so that service providers can continue to deliver meaningful investment education to plan participants in accordance with a workable and reliable standard of distinction between investment education and investment advice.
- The best interest contract exemption – PSCA encouraged the DOL to simplify the rules that permit financial advisors to negotiate agreements with retirement investors to achieve prohibited transaction relief when receiving compensation.
Rich McHugh, PSCA's Vice President, Washington Affairs is available to discuss the rule and its impact on plan sponsors. Contact Hattie Greenan at firstname.lastname@example.org to schedule a time to speak with him.
About the Plan Sponsor Council of America
The Plan Sponsor Council of America (PSCA) is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of more than six million employees to solve real problems, create positive change, and expand on the success of the employer-sponsored retirement system. With more than 1,000 members representing employers of all sizes, we offer a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of our commitment to improving retirement security for millions of Americans. For more information, visit www.psca.org.
Director of Research and Communications
Plan Sponsor Council of America (PSCA)
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SOURCE Plan Sponsor Council of America