Appearing at the Employee Benefit Research Institute’s 2023 Spring Policy Forum on May 11, Lisa Gomez, Assistant Secretary for the Employee Benefits Security Administration (EBSA), told attendees that the department is busy working on getting guidance out the door.
On the retirement side, Gomez explained that a rewrite of the conflict-of-interest rule continues to be a “huge priority” for the Biden administration and that stakeholders should expect to see a Notice of Proposed Rulemaking soon. The Assistant Secretary didn’t get into specifics of what that rewrite might entail, but did observe that the 2016 rule—which was subsequently vacated by the 5th U.S. Circuit Court of Appeals—was the first attempt to update the rules that “harken back” to 1975 when the regulations were first adopted. “Things have changed markedly in the retirement market” since then, and EBSA is trying to come up with a proposal that will reflect those changes, Gomez noted.
As a reminder, the Department of Labor (DOL) plans to amend the regulatory definition of the term fiduciary to “more appropriately define” when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries. The proposed amendment to the 1975 regulation would “extend the protections associated with fiduciary status to more advice arrangements,” according to the DOL’s regulatory agenda. EBSA also is evaluating available prohibited transaction class exemptions and plans to propose amendments or new exemptions to “ensure consistent protection of employee benefit plan and IRA investors.”
Gomez added that she looks forward to hearing from stakeholders on the new rule.
Turning to SECURE 2.0, the Assistant Secretary further advised that EBSA is working on a number of different guidance projects and that the agency intends to meet all the deadlines set forth under the legislation.
In particular, she singled out the legislation’s establishment of a lost-and-found database, noting that it is a “tremendous undertaking” to develop. Gomez explained that EBSA has been working with industry stakeholders and various other government agencies that have done similar work in establishing broad-based databases. Another area under consideration is what specifically should go into the database and what the DOL should be doing to populate it.
EBSA also has been busy working on guidance revamping retirement disclosures and notices, noting that there were a lot of changes within the DB and DC context that were included in SECURE 2.0, she explained. To that end, she noted that they have been thinking about the most effective way for plan sponsors and the agency itself to communicate with participants. “When I came in October, one of my main priorities was helping people to understand who EBSA is and also making sure people understand what benefits they have and how they work,” adding that they really are of no use to participants and families if they don’t understand them.
Meanwhile, in a bit of humor addressing how the ESG rule has been “noncontroversial,” the Assistant Secretary further advised that EBSA continues to work to educate people about what the ESG [environmental, social and governance] rule says, what it means and what it doesn’t say, emphasizing that fiduciaries may (but are not required to) consider ESG factors if they’re deemed to be relevant. “Fiduciaries at all times have to be protecting the interests of participants and beneficiaries; the basic concept of a fiduciary is to never subordinate the interests of participants and beneficiaries.”
Gomez was confirmed by the U.S. Senate in late September 2022 and started with EBSA in October after working for almost three decades in the private sector representing plan sponsors (mostly Taft Hartley multiemployer plans). In doing so and having never previously worked in Washington, she noted that she hopes to bring a different perspective to EBSA.