The letter comes in response to a March 12 notice issued by the Department of Labor (DOL) regarding proposed rule changes under Section 408(b)(2) of the Employee Retirement Income Security Act (ERISA). The proposed amendments would modify the final 408(b)(2) service provider disclosure regulations to require covered service providers to furnish a “guide” to assist plan fiduciaries in reviewing required disclosure documents pursuant to ERISA (see “DOL Proposes Service Provider Fee Guides”). In the notice, OMB, in accordance with its obligations under the Paperwork Reduction Act (PRA), requested comments relating to the collection of information pertaining to the proposed rule.
In short, the service provider advocacy groups claim the DOL has not completed the threshold steps of determining whether such a guide is in fact needed or will be useful to plan sponsors. Nor, the letter contends, has the DOL developed a realistic estimate of the total time or expense required for affected service providers to prepare such a guide—rendering its request for comment inappropriate and even potentially unlawful.
The letter specifically takes issue with the 90-day deadline for comments on the proposed rule change (a period ending around June 10), saying that three months does not give the investing public enough time to share its opinions with the service providers or the DOL. The service providers undersigning the letter warn that the DOL may be inviting conflict under the PRA—which imposes certain timing restrictions on information collection requests from federal agencies—by setting a too-short deadline for public and industry comment.
“Given the unique circumstances here, where the agency proceeded with a notice of proposed rulemaking without a sufficient basis with respect to need or a realistic estimate of the total time required to comply with the proposed data collection, [the Office of Management and Budget] would not appear to have the ability to conduct its analysis within the required time frame,” the letter argues. “Consequently, the OMB should hold off on conducting the analysis until DOL develops a record as to the need (and associated cost) for the guide.”
The coalition’s letter also makes some more substantive challenges to the ideas underlying the proposed rule change beyond timing technicalities. For instance, the letter claims that nowhere in the proposed rule or supporting statements does the DOL cite published sources or otherwise support its position that plan fiduciaries currently have problems accessing information within the disclosures currently provided, or that the proposed rule will in fact resolve any purported problems plan fiduciaries may have in assessing information contained within fee disclosure documents.
Another important consideration raised in the letter relates to the DOL’s estimates for what it would cost service providers to issue fee guides. The service providers say they are troubled by the fact that the DOL says it lacks complete data and empirical evidence to estimate the cost for covered service providers to create the guides, implying the DOL is using the proposed rule itself to obtain data necessary for it to estimate the cost burden associated with the proposed rule—a fact they suggest is quite troubling.
The text of the letter is available here. Undersigned groups represent the interests of a strong majority of retirement plan service providers, including recordkeepers, banks, mutual fund companies, insurance companies and advisers to defined contribution retirement plans. They include the American Bankers Association (ABA), the American Council of Life Insurers (ACLI), the Investment Company Institute (ICI), the Securities Industry and Financial Markets Association (SIFMA) and the SPARK Institute Inc.