Borzi, ERISA Advisory Council Exchange Updates

By Ray Harmon • November 06, 2014 • 0 Comments

The ERISA Advisory Council has now made its final recommendations of 2014, and got an update on regulatory proposals in return.

On Nov. 4, the DOL’s ERISA Advisory Council followed up on its August meetings with the presentation of this year’s final recommendations to secretary of labor Tom Perez and assistant secretary Phyllis Borzi. During the same meeting, Borzi provided an update on outstanding regulatory proposals, including the infamous redefinition of “fiduciary” proposal, a.k.a. the “conflict of interest” rule.


The Council focused on three main topics this year, the first two of which are most relevant to ASPPA members’ business: 

  • facilitating lifetime plan participation, 
  • outsourcing employee benefit plan services, and 

  • pharmacy benefit manager compensation and fee disclosure.

According to the Council, plan sponsors’ attitudes about keeping assets in the plan after workers terminate employment have been evolving in recent years, from a tendency to distribute monies at termination to a growing desire to help prevent leakage. However, some employers have bee reluctant to provide guidance to terminating employees due to confusion or fear about incurring fiduciary liability. Thus, the Council recommended that the DOL “provide education and outreach to participants and plan sponsors on the considerations and benefits to participants of retaining assets within the employer-sponsored system.” 

Included among these “education and outreach” suggestions were for DOL to develop model communication materials for employers to give to employees, as well as the provision of additional guidance to employers about certain plan design features that might encourage the balances to stay with the plan, such as offering loans against those balances, and allowing the continuation of loan repayments after separation from employment. Assistant secretary Borzi urged the Council to consider developing such model communications in its next year of activity to assist the DOL in the process.

Regarding the issue of outsourcing employee benefit services, the Council urged the DOL to educate plan sponsors on current industry practices, including the kinds of services and providers available and common practices for contracting for those services. Additionally, the Council recommended that the DOL clarify the legal framework under ERISA for delegating responsibility to service providers to help minimize confusion about fiduciary liability. The Council also recommended that the DOL facilitate the use of multiple employer plans (MEPs) as a means of encouraging the formation of benefit plans and to also update existing guidance on insurance coverage and ERISA bonding, something Borzi indicated the DOL has begun working on.

Borzi’s Update

After thanking the group and its five outgoing members for their hard work, Borzi provided a brief update on a handful of regulatory items. First, she noted that the request for information (RFI) on brokerage windows is still open and will close on November 19 (NAPA plans to submit comments in response to this RFI). According to Borzi, there are no particular next steps in mind other than to review the comments and proceed from there. She also stated that the comment period on a proposed regulation to require electronic submission of notices and statements for top hat plans and apprenticeship and training plans is still open and will close Dec. 29.

Lastly, Borzi provided an update on the DOL’s proposal to redefine “fiduciary.” Joking that “I know you won’t let me leave without mentioning it,” she indicated that the Department is continuing to work on it, with an expected completion in January 2015, consistent with prior reports.

ASPPA will continue to monitor these kinds of meetings for new developments.

Ray Harmon, Esq. is government affairs counsel for ASPPA/NAPA/NTSA.