Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. Print
May 31, 2010 01:00 AM

Execs fear fee-disclosure bill could thwart DOL efforts

Doug Halonen
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Mutual fund executives are slamming new fee-disclosure legislation — approved by the House on May 28 — on grounds that it could derail the Department of Labor's own long-pending efforts to set final fee-disclosure regulations for defined contribution plans.

    Mutual fund industry representatives say they don't believe disclosure provisions — included as part of a last-minute addition to the American Jobs and Closing Tax Loopholes Act of 2010 — would be substantially more onerous than the pending DOL regulations. The provisions cover disclosure from service providers to plan sponsors, and from plan sponsors to participants.

    But adoption of the bill would delay, for years, final resolution of the industry's DC plan fee-disclosure requirements, they say, an issue that many in the retirement industry would like to put to bed.

    “Our concern is that it (the legislation) is just going to further delay comprehensive fee disclosure,” David Abbey, managing counsel and vice president of T. Rowe Price Associates Inc., Baltimore, said in an interview.

    “The retirement community was looking forward to the certainty of final legal standards in this area after four or five years of deliberations,” noted James M. Delaplane Jr., an ERISA attorney at Davis & Harman LLP, Washington. “I think folks had hoped we had finished that process and we could move on.”

    But others contend legislation is important because it would give the DOL regulations the force of law and would clarify the Labor Department's authority to require service providers to disclose fee information to plan sponsors. It also would — for the first time — require local and state government retirement plans, including non-ERISA 403(b) and participant-directed 457 plans, to comply with the DOL fee-disclosure regulations.

    “We think there should be greater transparency here,” said David Certner, AARP legislative policy director, Washington. “Having greater disclosure will help drive fees down.”

    A final DOL rule detailing all the fee and compensation information that service providers should be disclosing to plan sponsors had been scheduled to be published by the end of May.

    A second rule, laying out what fee information plan sponsors should provide to plan participants, is scheduled for publication in September.

    ERISA attorneys believe that DOL officials will put a hold on both rules at least until they see whether the legislation is enacted into law. (The House voted 215-204 to approve the jobs bill May 28. It now goes to the Senate, which returns to work from its Memorial Day recess on June 7.)

    Phyllis Borzi, assistant secretary of labor for the Employee Benefits Security Administration, had not returned telephone calls at deadline. Joseph De Wolk, a DOL spokesman, declined comment.

    But some pension industry observers said it would have been more efficient for Rep. George Miller, D-Calif., and Rep. Richard Neal, D-Mass. — the two lawmakers promoting the fee-disclosure provisions — to drop their legislation and try to work with the Labor Department.

    “Now that you've got a DOL that is led by your own people (Democrats), why wouldn't you work with those regulators to craft rules that strike the right balance, rather than imbedding possibly overbroad rules into the statute?” asked Andrew Oringer, an ERISA attorney with Ropes & Gray LLP, New York.

    “If you get it (the legislation) wrong, you're embedding the wrong answers, which will then be extremely difficult to fix,” he said.

    ICI also disagrees

    In a May 21 letter to congressional leaders, the mutual fund industry's Investment Company Institute, Washington, also disagreed with the need for the legislation.

    “While the institute expects the DOL rules to entail significant compliance costs for our industry, we support them and believe ensuring that plan sponsors and participants have the information they need to make informed decisions is critically important,” said the letter, signed by Paul Schott Stevens, ICI president and CEO.

    “In light of imminent final regulations, legislation is not necessary,” Mr. Stevens said in his letter. “In fact, enacting 401(k) fee provisions in H.R. 4213 will simply delay implementation of disclosure reform because regulators will need to interpret the new provisions and draft proposals to implement them.”

    Said Aaron Albright, a spokesman for Mr. Miller, in an e-mail response to questions: “Sounds like the industry's 'excuse du jour' against letting consumers know how much Wall Street is taking from their retirement savings.”

    In a May 28 statement, Mr. Miller, chairman of the House Education and Labor Committee, said: “It's beyond time that Americans have basic, clear and timely information on the costs and choices contained in their 401(k) plans. Guaranteeing complete and simple disclosure of fees will help give Americans a fighting chance to strengthen their retirement and increase our nation's future economic security.”

    Other key provisions in the bill would provide funding relief to defined benefit plans and require investment partnerships — including hedge funds, real estate partnerships, private equity and venture capital firms — to pay ordinary income tax on carried interest.

    The DB funding relief provisions in the bill would allow defined benefit plans to stretch out amortization periods for investment losses for two of the years between 2008 and 2011, over a period of either 15 years or nine years, at the option of the plan sponsor.

    Current law requires plans to amortize their investment losses over seven years.

    A key provision also would require employers that extend their amortization periods to make additional contributions to their pension funds if they pay employees in excess of $1 million a year, pay out extraordinary dividends to shareholders or redeem in excess of 10% of the market capitalization of their stock.

    Carried interest in investment partnerships is currently taxed as a capital gain at 15%.

    The legislation would require partnerships to treat 75% of carried interest not due to a return on capital as ordinary income — which is taxed at a rate of up to 35%.

    Related Articles
    Democrats squabble over fee disclosure
    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    Targeting millennials: Author, niece put his latest book to music
    Targeting millennials: Author, niece put his latest book to music
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    Morningstar Indexes' Annual ESG Risk/Return Analysis
    The Future of Infrastructure: Building a Better Tomorrow
    Outlook 2023: Opportunity in a volatile world
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing