The American Benefits Council doesn't like the Department of Labor's proposed fiduciary rule—and worries that bearing fiduciary responsibility under the proposed new standard could see employers cutting back on efforts to engage employees and educate them as to their choices.
That's according to testimony delivered at a hearing by Lynn Dudley, senior vice president, global retirement and compensation policy, who said in part, "Employers are concerned that the new conflict of interest and fiduciary definition rules will generate uncertainty, cost and potential liability."
Dudley also expressed concern that the proposed rules would affect everything from employee assistance and benefits education programs to call centers, on-site benefits briefings, the availability of human resources personnel to answer some basic questions asked by employees, investment education, and external investment advisory programs.
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"Plan sponsors are concerned that the standard for fiduciary advice is too easy to trigger," Dudley said, adding, "The proposed generic information permitted as 'education' in the proposal would not be directly responsive or provide sufficient context to be useful to plan participants in many cases."
Fiduciary relationships should not be treated as "existing," according to Dudley's testimony, "unless both the parties mutually understand and acknowledge that the individualized recommendations provided in connection with an employer-sponsored plan will play a significant role in the recipient's financial decision-making and reflects the considered judgment of the advisor."
Safe harbor accommodations should be provided, said Dudley, to keep sponsors from co-fiduciary liability for acts of either an employee or a service provider if the employer "establishes, communicates and reasonably follows a clear written policy." Accommodations should also be provided to protect plan sponsor employees who "unintentionally" violate the policy, "or do so a minimum number of times."
She also said that the existing definition of "education" be retained so that "illustrative models" can be linked to specific funds contained in plans.
Finally, ABC called for "a substantial transition period" before implementing any provisions that are adopted.
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