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Welcome to the Snell & Wilmer Benefits Blog. We will be posting about current employee benefits and executive compensation topics and issues. We invite you to contact the authors with your thoughts or questions.Blog Contributors
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Final DOL Rule Imposes Fiduciary Limitations on Social Investing
The DOL recently issued a final rule (“Rule”) providing guidance on the long-standing issue of whether ERISA fiduciaries are permitted to consider non-pecuniary factors while making investments (or selecting investment funds) that promote one or more environmental, social or corporate governance goals (so called “ESG Investments”). The preamble to the Rule acknowledges that ERISA fiduciaries must act solely in the interest of plan participants/beneficiaries and that courts have consistently interpreted this interest to refer to pecuniary, rather than non-pecuniary benefits.
Prior DOL ESG Investment guidance also required ERISA fiduciaries to place financial returns over other non-financial goals and prohibited a fiduciary from subordinating the interests of participants/beneficiaries in their retirement income to “unrelated objectives.” However, the DOL previously stated that, when comparing ESG and non-ESG investments, if the financial returns were comparable, it was not a breach of fiduciary duty to select the ESG Investment. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged DOL, environmental, ERISA, ESG, ESG Investments, fiduciary, governance, social
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Fiduciary Rule to Go Into Effect but DOL Provides Temporary Non-Enforcement Policy
As reported in our April 18th blog, the Department of Labor (“DOL”) officially delayed the applicability of the Fiduciary Rule for 60 days, until June 9, 2017. Given the multiple delays leading up to the proposed June 9th date and President Trump’s February 3rd executive memorandum calling for a full examination of the impact of the Fiduciary Rule, some questioned whether the Rule would be further delayed. However, on Monday, DOL Secretary Alexander Acosta wrote the DOL has “found no principled legal basis to change the June 9 date while we seek public input” and “[r]espect for the rule of law leads us to the conclusion that this date cannot be postponed.”
Although the new definition of the term “fiduciary” will become applicable on June 9th, certain provisions of the Rule will be phased in over time, with a full compliance date scheduled for January 1, 2018. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged Acosta, DOL, exemption, FAB 2017-02, fiduciary, fiduciary rule, June 9, non-enforcement
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The Official Delay of the Fiduciary Rule: A Compromise
On April 7, 2017, the DOL published a final rule, officially delaying the applicability of the Fiduciary Rule for 60 days, until June 9, 2017.
The DOL noted that a full review of the Fiduciary Rule and its impact is likely to take longer than 60 days. However, the DOL expressed reservations about providing a more extended delay of the application of the Rule, given the Department’s prior findings of harm to retirement investors. Consequently, the final rule on the delay results in somewhat of a compromise.
Specifically, the DOL extended the applicability date for the Fiduciary Rule, the BIC Exemption, and the Principal Transactions Exemption for 60 days. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged BICE, DOL, executive memorandum, fiduciary, fiduciary rule, Impartial Conduct Standards, Rule
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Dealing with Long-Winded Out-of-Network Provider Nuisance Letters
Over the past couple years, more and more of my clients with self-funded plans have received letters from out-of-network providers appealing denied claims. The letters are usually 20 to 30 pages long, not very specific, and make various accusations against the plan and its fiduciaries.
Most of the letters follow a standard approach. They start by alleging breaches of fiduciary duty, they request all sorts of plan documents, and they request additional appeals to which the participant may or may not be entitled. The biggest problem is that these letters are never very specific in exactly what they want. Instead, they make vague accusations, and hope some or all will stick. Read More ›
Posted in Employee Benefits, Health & Welfare Plans
| Tagged anti-assignment, due diligence, ERISA, fiduciary, fiduciary duty, out of network, out of network provider, provider
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Five Lawsuits Filed Against DOL’s Fiduciary Rule (so far)
As we previously discussed in our May 19, 2016 SW Benefits Update, the Department of Labor (“DOL”) recently issued final regulations on fiduciary conflicts of interest in retirement programs. Since 2010 when the DOL first proposed regulations addressing self-interested advice to retirement plan and IRA participants, the rule has been widely criticized by some in the financial services industry as being overly broad.
Both Congress and industry and trade groups have been unhappy with the DOL’s rulemaking in this area and have threatened further action since the rule was first proposed. On May 24, the Senate passed a resolution to block the fiduciary rule, which President Obama vetoed on June 8. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged Benefits Update, conflict of interest, Congress, Department of Labor, DOL, fiduciary, fiduciary rule, final regulations, Obama, President Obama, regulations, Senate, veto
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401(k) Plan Fiduciaries – Have you thought about your continued offering of the PIMCO Total Return Fund?
The abrupt departure of Bill Gross from PIMCO leaves many investors pondering their next move. Should an investor stay the course and see how PIMCO’s new investment team performs? Should an investor leave and follow Mr. Gross to Janus Funds? Should an investor rush to find a new bond fund manager?
These questions are particularly important for fiduciaries of 401(k) and other qualified retirement programs that offer PIMCO Total Return Fund as an investment option. Mr. Gross was the lead manager of the Total Return Fund, which reportedly is the second largest bond fund in existence and is a very common and popular choice for 401(k) and other defined contribution retirement plans. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 401k) plans, Bill Gross, fiduciary, fiduciary duty, fiduciary standards, PIMCO, prudent person standard, qualified retirement plans
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Plan Fiduciaries Get an Assist from the DOL
Since 2012, covered service providers (“CSPs”) such as recordkeepers and investment advisors have had to provide annual service and fee disclosures to plan fiduciaries under Section 408(b)(2) of ERISA. Plan fiduciaries cannot remain idle after receiving these disclosures — review of the disclosures is a fiduciary duty. The Department of Labor (“DOL”) requires fiduciaries to review the disclosures to make sure that the services provided are appropriate and the fees charged are reasonable. If the disclosures are not complete, the fiduciaries have an affirmative obligation to request the missing information from the CSP or report the CSP to the DOL if the information is not provided upon request. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 408(b)(2), DOL, fiduciary, participant level disclosures, qualified retirement plans
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