The ERISA Industry Committee on Monday asked the U.S. Department of Labor to exclude large defined contribution plans from requirements in proposed regulations governing a guide to DC plan fee disclosure.
The proposed rules, issued in March for public comment, are a follow-on to other fee-disclosure regulations that took effect in mid-2012 covering information prepared by service providers for DC plans.
“ERIC is concerned that the DOL's focus on small plans may cause it to assume that similar issues exist for large plans,” said a letter from Kathryn Ricard, ERIC's senior vice president for retirement policy, to the Labor Department. ERIC is a trade group that represents large employers in retirement, health care and benefits matters.
Ms. Ricard's letter referenced a preamble in the DOL's proposed regulations that says the agency wants to develop a fee-disclosure guide because “anecdotal evidence suggests that small plan fiduciaries in particular often have difficulty obtaining required information in an understandable format.” Small plans, the preamble continued, “lack the bargaining power and specialized expertise possessed by large plan fiduciaries.”
Ms. Ricard said in an interview that a large DC plan, in general, is one with 10,000 or more participants.
“Fiduciaries of plans sponsored by America's largest employers generally have a team of sophisticated professionals and access to independent expert advice to help them analyze plan fees,” the ERIC letter said. “Smaller plan sponsors typically have limited resources to expend analyzing plan fees and less information readily at their disposal.”
If large plans must follow the same fee-disclosure approach as small plans, the ERIC letter predicted a guide ordered via regulation would increase the cost to service providers — a cost that would “likely” be passed on to DC plans “and, in many cases, to the plan's participants.”
Robert Steyer writes for Pensions & Investments, a sister publication of Business Insurance.