Department of Labor regulations on enhanced retirement plan fee disclosures won't be changed by efforts from House Education and Labor Committee Chairman George Miller, D-Calif., to enact legislation on fee transparency, according to the House committee's policy director.
“Whatever we do would be completely consistent (with the DOL's rules),” said Michele Varnhagen, the committee's labor policy director, during a conference sponsored by the American Society of Pension Professionals and Actuaries, Arlington, Va., and other groups. The conference was Sept. 21 in National Harbor, Md.
The Labor Department unveiled an interim final rule that details the fee and compensation information that service providers will be required to provide to companies that have retirement plans, effective July 16, 2011. The rule is considered interim while the DOL gives the public an opportunity to comment on aspects of the rule before it goes into effect.
Service providers fear that legislation on fee disclosure could force them to dramatically reconfigure reporting systems to comply with a whole new set of obligations, after having just retooled to report the new information required by the DOL's new rules.
“That doesn't benefit anybody,” said Brian H. Graff, ASPPA executive director and CEO at the “DOL Speaks” conference. The other conference sponsors included the DOL, the American Bar Association Joint Committee on Employee Benefits, Washington, and the Society for Human Resource Management, Alexandria, Va.
Nonetheless, Ms. Varnhagen said Mr. Miller believes that fee-disclosure legislation is needed to ensure that transparency rules are not watered down or eliminated by future DOL executives.
“(Mr. Miller) remains committed to legislation that would enshrine these principles into law,” Ms. Varnhagen said.
A Democratic Senate staffer at the conference, who asked not to be identified by name, said some federal lawmakers are considering extending the DOL's fee disclosure requirements to cover 403(b) plans — defined contribution plans for employees of public schools and tax-exempt organizations — and Individual Retirement Accounts. The DOL's interim fee-disclosure rule applies only to service providers to retirement plans under the Employee Retirement Income Security Act, including defined benefit and defined contribution plans.
Also at the conference, Phyllis Borzi, assistant secretary of labor for the Employee Benefits Security Administration, said the agency would “soon” release a checklist that defined contribution plan executives could use to assess target-date retirement fund options before selecting one for use in their plans.
Some ERISA attorneys have expressed concern that the checklist could prove to be as much help to plaintiff's attorneys as plan fiduciaries by giving the law firms criteria to measure the appropriateness of the target-date fund.
“It's the kind of thing our auditors will use (when investigating plans),” Ms. Borzi said in a follow-up interview after her conference session. “It's a checklist everyone can use.”
Also at the conference, Michael Davis, EBSA deputy assistant secretary of labor, briefed the more than 200 in attendance on the ongoing efforts of the DOL and the Department of Treasury to promote use of the annuity payouts in defined contribution plans (Pensions & Investments, Sept. 20).
Mr. Davis said the federal agencies did not want to force plans to offer annuity payout options.
When a show of hands revealed that very few conference attendees have annuity payout options in their DC plans — and that very few want such an the option — Mr. Davis said: “That's part of the challenge (that there's so little interest in annuity options). You can see what we're up against.”