For Immediate Release
Washington, DC – The ERISA Industry Committee (ERIC) today urged the Department of Labor (DOL) to exclude large plans from its proposal to require service providers to distribute a “guide” or similar tool to fiduciaries in order to satisfy the disclosure regulations under section 408(b)(2) of the Employee Retirement Income Security Act.
The DOL in March 2014 released a proposed regulation that would amend the final fee disclosure regulations (issued February 2012) requiring service providers to provide a guide in certain circumstances to plan fiduciaries to assist them in reviewing the detailed fee disclosures. Covered service providers that made the disclosures in multiple or lengthy documents would need to provide plan fiduciaries with a guide that identified the document and/or the page on which each of the disclosures were made.
ERIC agrees that a guide requirement might be beneficial to fiduciaries of small and medium-sized plans, but urges the DOL to recognize the difference between large and small plans, noting that a guide requirement would not benefit large plans.
“Fiduciaries of very large plans have sophisticated professionals and advisors which enable them to obtain and analyze the relevant information to properly evaluate their service providers,” said Kathryn Ricard, ERIC’s Senior Vice President for Retirement Policy. Ricard adds that fiduciaries “typically also have relationships with their service providers that enable them to get clarification and additional details, as needed.”
In addition, ERIC contends that a proposed guide for large plans would be unduly burdensome and inconsistent with the President’s Executive Orders directing agencies to refrain from issuing unnecessary regulations and to seek ways to reduce and simplify regulatory burdens.
Moreover, ERIC warns that a guide requirement would generate additional costs to plans, participants, and service providers without a corresponding benefit to participants. “A guide or summary would result in an additional expense to service providers that would ultimately harm the plan participants as the additional costs that the service provider incurs to prepare the guide will likely be passed through to the plan and, in many cases, to the plan’s participants,” Ricard noted.
ERIC also urges the DOL to recognize that it can treat very large plans differently from small and medium-sized plans for purposes of any guide requirement, similar to how the DOL has treated large plans differently from small plans in a variety of other contexts.
For purposes of the proposed guide requirement, ERIC requests that DOL define large plans as those retirement plans having 5,000 or more participants or at least $100 million in assets, noting that these thresholds have been used in a variety of contexts involving retirement plans.
The letter can be accessed by clicking on the link below.