Newly issued guidance from the Department of Labor offers retirement plan fiduciaries a list of best practices for locating missing participants and insight into how it approaches investigations on the matter, but left stakeholders wanting more and expressing concerns about the process.
"It's nice that the department released a list of things that they've identified as best practices, but it's frustrating that they haven't linked it to the statute of ERISA, it's frustrating that it comes after seven years of investigations, and it's frustrating that even after all of this they couldn't put together a road map that says, 'We understand that not everybody is going to be found, but we don't want plan fiduciaries spinning their wheels for days and hours trying to figure out what to do,'" said Kevin Walsh, a Washington-based principal at Groom Law Group.
The Labor Department issued three pieces of guidance related to missing participants on Jan. 12, including the list of 27 best practices it said retirement plan fiduciaries should consider in helping reduce missing participant issues. The steps include maintaining accurate census information for the plan's participant population; implementing effective communication strategies; conducting missing participant searches; and documenting those procedures and actions. Before the new guidance, the Labor Department had no outlined process for plan sponsors to follow.
The guidance is a "good first step," said Aliya Robinson, senior vice president of retirement and compensation policy at the ERISA Industry Committee in Washington, but she remains concerned that list of best practices will become "a checklist that auditors look at to see whether or not plan sponsors have done" them all.
Bradford P. Campbell, a Washington-based partner for Faegre Drinker Biddle & Reath LLP and former assistant secretary of labor for the Employee Benefits Security Administration during President George W. Bush's administration, said the guidance is helpful, but "it's not quite what people had hoped in that it's not a, 'Here's what you should do to be in compliance.' It's much more principles-based and not a check-the-box type of guidance."
Michael P. Kreps, a principal at Groom Law, also in Washington, said the guidance is a "good summary of a lot of the positions that the department has taken in investigations over the past six or so years," but will be "disappointing to plan sponsors who wanted more clarity as to exactly what they need to do. It's a big laundry list of best practices, but it doesn't tell you which ones you need to do to meet your fiduciary obligations; it's more of a facts and circumstances test."
The best practices list will still lead to uncertainty among plan sponsors when searching for missing participants, stakeholders said.
Will Hansen, Arlington, Va.-based executive director of the Plan Sponsor Council of America and chief government affairs officer at the American Retirement Association, said he'd like a "legislative or regulatory solution that states that the plan sponsor must do X, Y, Z in attempting to locate a missing participant and once they have completed those steps the burden then shifts to the individual. That is more of a definitive process."
The best practice list gives "us something to work with and improve upon," said Tim Rouse, executive director at the Simsbury, Conn.-based SPARK Institute, which represents retirement industry players such as record keepers.
Mr. Rouse wasn't expecting the Labor Department to issue specific guidelines to which plan fiduciaries and their record keepers would adhere. "The DOL doesn't want this to become a simply checking-the-box process, and if there was a specific set process the fear is that people would just do the minimum and be done," Mr. Rouse said.