Borzi Lays Out Process for Fiduciary Rule; De-Risking Among Issues Council to Study

Although the reproposed fiduciary rule (RIN 1210-AB32) is under review at the Office of Management and Budget, that “is just the beginning of the process,” Phyllis C. Borzi, assistant secretary of labor for the Employee Benefits Security Administration, told the ERISA Advisory Council.

Finalizing the re-proposed rule is an open process that begins when the proposed rule is published in the Federal Register, Borzi said at the meeting March 20. The EBSA, part of the Department of Labor, will have a public comment period, public hearings, then reopen the comment period, post the transcript of the hearings, and will continue to accept comments even after the comment period has passed, she said.

Borzi spoke during the council's initial meeting of the year, at which it announced which topics it will address in 2015, including pension plan de-risking.

The DOL's fiduciary rule, intended to prevent conflicts of interest when brokers give retirement advice, landed at the OMB on Feb. 23 and got a boost of support from President Barack Obama, who said current regulations are out of date.

DOL's efforts to revise and expand the definition of fiduciary under the Employee Retirement Income Security Act have been in the works for several years, and the release of the rule has been pushed back several times.

A rule was proposed in October 2010, but it was withdrawn in September 2011, and faces mounting pressure from Wall Street groups and some Republicans in Congress who consider it regulatory overreach and expect to challenge it under the Congressional Review Act.

Form 5500 Guidance

The EBSA is also working on the project for Form 5500, Annual Return/Report of Employee Benefit Plan, Borzi said. This year, the agency is working on updating the form to modernize it and improve the ability to mine the data, she said.

The goal is to publish a proposed rule (RIN-1210-AB63) in July with form changes, instructions and data elements, and then give the public the opportunity to provide input. The DOL's fall regulatory agenda also listed July as the target date for the rule.

Regarding lifetime income illustrations, Borzi said the DOL hopes to get it out in the “near future.”

The DOL issued in May 2013 an advance notice of proposed rulemaking (RIN 1210-AB20) that would require that pension benefit statements for defined contribution plans include lifetime income illustrations, and invited comments on its proposal.

Under the DOL's contemplated proposal, a pension benefit statement for defined contribution retirement plans would show the current balance of a participant's retirement account, as well as a projected account balance at retirement. The statements also would include two lifetime income illustrations that would be based on the current balance of a participant's retirement account and the participant's projected account balance at normal retirement age.

Excerpted from a story that ran in Pension & Benefits Daily (03/20/2015).

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