In late July, I had the pleasure of attending the Senate Finance Committee hearing on the nomination of Tom Reeder to the position of PBGC Executive Director. I can’t think of a better person for the job, and it appeared that both Chairman Orrin Hatch and Ranking Member Ron Wyden agreed. If he has not already been confirmed when you read this, he soon will be.
At a hearing such as that one, you learn what is on the Senators’ minds other than the nominee. For Sens. Wyden (D-Ore.) and Maria Cantwell (D-Wash.), it was the multiemployer plan cutback provisions included in last year’s CRomnibus bill. It appeared that both would like to repeal that provision. There is zero chance of repeal, but if any pension legislation is considered by regular order in the remainder of this Congress (as opposed to being slipped into an omnibus bill), expect some Dems to make this an issue.
The hearing was a welcome break from the D.C. benefits community’s focus on the Department of Labor’s re-proposed fiduciary rule. Since it was published back in April, every benefits group in town, and every financial services organization, has been obsessed with trying to shape — or in some cases stop — this rule. When I first read the rule, I didn’t see much of interest to ACOPA members, but the ACOPA Government Affairs Committee’s (GAC) discussion of the proposal raised concerns.
For example, assume that you are involved in terminating a plan, and you know there is an investment that is not liquid. You tell the plan sponsor/trustee that that property should be sold because cash will be needed to pay lump sums and purchase an annuity contract. Is that “investment advice”? It is a recommendation with regard to a specific investment of that plan, but is based on a terminating plan’s need for liquidity, not a value judgment on that investment.
- The preamble to the proposed regulation said, “The new proposal clarifies that attorneys, accountants, and actuaries would not be treated as fiduciaries merely because they provide such professional assistance in connection with a particular investment transaction.” In fact, the proposed rule does not make it clear that actuaries will not, in the normal course of their work, become fiduciaries, and the final rule should do so.
- The proposed rule includes a carve-out for education, but is focused on the education of 401(k) plan participants. Some common defined benefit plan situations should be included in the examples of what is considered “education.”
- The proposed rule includes a carve-out for the offering of platforms of investments, and the marketing of the platform by the platform provider. This carve-out is also focused on 401(k) plans, and the final rule should clearly include defined benefit arrangements in the carve-out. (We also asked that the carve-out for marketing be extended to third parties, such as TPAs, that market the platforms.)
In addition to reviewing the proposed fiduciary rule from the perspective of our members, ACOPA GAC has filed a letter with the DOL on a minor issue regarding the small plan audit exception and final AFN rules. We also have worked with ASPPA’s IRS subcommittee on a comment letter regarding EPCRS and overpayments, and will contribute to ASPPA’s plan documents committee’s comments on changes to the determination letter program.
Up next? When Congress returns from recess, having passed a 3-month extension of the highway trust fund, the highway bill will be on the agenda again, along with a continuing resolution to keep the federal government operating after the fiscal year ends September 30. So far there has been no discussion of using the private retirement system to pay for a highway bill. We will be encouraging them to keep it that way.
Judy Miller is the Executive Director of ACOPA and Director of Retirement Policy at the American Retirement Association.