DOL Highlights Regulatory Agenda
| Date Posted: December 22, 2009 |
Investment advice and lifetime annuities top the Department of Labor's (DOL) retirement plans agenda in 2010. More specifically, the DOL's Employee Benefits Security Administration (EBSA) intends to clarify when a person who provides investment advice to 401(k) plan participants will be considered a fiduciary. EBSA also plans to explore how it can encourage defined contribution (DC) plans to offer lifetime annuities with a steady stream of income for participants and beneficiaries.
Investment Advice
EBSA recently withdrew its final rule on investment advice and plans to issue a new set of regulations in February. The department proposed the rule earlier this year during the last days of the Bush administration. The regulations specify how financial advisers acting under the authority of a 401(k) plan or other participant-directed individual account plans can provide investment advice to plan participants and beneficiaries.
The rule was designed to increase retirement plan participants' access to investment advice and to protect them from receiving conflicted advice from advisers selling financial products for their own gain. But critics objected that the regulations would not provide adequate protections. The Obama administration froze the regulations after taking office in January.
"I believe the recently withdrawn rule went far beyond what Congress intended in providing for an expansion of the availability of investment advice to 401(k) plan participants," Assistant Secretary of Labor (EBSA) Phyllis C. Borzi remarked in a recent Webcast. "Accordingly, the regulated community should expect a proposal which more closely follows the intent of Congress in establishing a statutory exemption from the conflict of interest provisions of ERISA."
The new set of regulations has a goal of "ensuring that financial advisers and similar persons are required to meet ERISA's strict standards of fiduciary responsibility," according to the DOL's regulatory plan.
Lifetime Annuities
EBSA also intends to consider regulatory or other steps it can take to induce DC plans to offer lifetime annuities or similar lifetime benefits distribution options for participants and beneficiaries of DC plans. As a first step, EBSA plans to publish a request for information in January. It will seek suggestions and comments from the public on how to enhance retirement security by reducing the chances that workers will run out of funds during their retirement years.
"The departments [DOL and the Department of Treasury] are publishing a joint request for information as a first step in exploring impediments, whether statutory, interpretive or regulatory, to the offering of lifetime income products by plan sponsors and to the selection of such products by workers," Borzi said. "It is premature to announce whether we will be publishing a safe harbor for in-plan annuities."
Borzi said the objective is to start a dialogue among stakeholders about the issue and ultimately to ensure that all workers have the opportunity to consider an annuity or other lifetime income product.
"We have no pre-conceived conclusions about what path we will take regarding lifetime income options," Borzi said.
Find more on DC retirement plans in the 401(k) Handbook from Thompson Publishing Group.
Investment Advice
EBSA recently withdrew its final rule on investment advice and plans to issue a new set of regulations in February. The department proposed the rule earlier this year during the last days of the Bush administration. The regulations specify how financial advisers acting under the authority of a 401(k) plan or other participant-directed individual account plans can provide investment advice to plan participants and beneficiaries.
The rule was designed to increase retirement plan participants' access to investment advice and to protect them from receiving conflicted advice from advisers selling financial products for their own gain. But critics objected that the regulations would not provide adequate protections. The Obama administration froze the regulations after taking office in January.
"I believe the recently withdrawn rule went far beyond what Congress intended in providing for an expansion of the availability of investment advice to 401(k) plan participants," Assistant Secretary of Labor (EBSA) Phyllis C. Borzi remarked in a recent Webcast. "Accordingly, the regulated community should expect a proposal which more closely follows the intent of Congress in establishing a statutory exemption from the conflict of interest provisions of ERISA."
The new set of regulations has a goal of "ensuring that financial advisers and similar persons are required to meet ERISA's strict standards of fiduciary responsibility," according to the DOL's regulatory plan.
Lifetime Annuities
EBSA also intends to consider regulatory or other steps it can take to induce DC plans to offer lifetime annuities or similar lifetime benefits distribution options for participants and beneficiaries of DC plans. As a first step, EBSA plans to publish a request for information in January. It will seek suggestions and comments from the public on how to enhance retirement security by reducing the chances that workers will run out of funds during their retirement years.
"The departments [DOL and the Department of Treasury] are publishing a joint request for information as a first step in exploring impediments, whether statutory, interpretive or regulatory, to the offering of lifetime income products by plan sponsors and to the selection of such products by workers," Borzi said. "It is premature to announce whether we will be publishing a safe harbor for in-plan annuities."
Borzi said the objective is to start a dialogue among stakeholders about the issue and ultimately to ensure that all workers have the opportunity to consider an annuity or other lifetime income product.
"We have no pre-conceived conclusions about what path we will take regarding lifetime income options," Borzi said.
Find more on DC retirement plans in the 401(k) Handbook from Thompson Publishing Group.
 |
||||||||||||||||||||
|
||||||||||||||||||||
 |
||||||||||||||||||||
