Secretary of Labor Thomas Perez is being credited with re-energizing the Department of Labor’s bid to ensure that a rule to amend the definition of fiduciary under the Employee Retirement Income Security Act gets reproposed soon.
After being sworn in last July, Perez “immediately started focusing” on DOL’s fiduciary rulemaking, said Knut Rostad, president of the Institute for the Fiduciary Standard. Being no political neophyte, “he spoke to pro-fiduciary groups and started his rounds on the Hill to hear the concerns of lawmakers directly.”
Perez told a Senate Appropriations subcommittee in mid-April that the redrafting of the proposal that was withdrawn in 2010 “has been slowed down at my direction significantly because we wanted to take a step back [to] listen and learn from everyone.”
Perez noted, “We’ve been engaged in a significant amount of outreach, and I’ve met with a number of senators and congressmen on both sides of the aisle, and we’re going to continue to do that.”
Dennis Kelleher, president and CEO of Washington-based Better Markets, agreed that Perez going to Capitol Hill “was a smart thing to do,” as “a lot of the industry generated misinformation about what the DOL is doing.” One of DOL’s main goals, he added, is stopping “undisclosed conflicts of interest in providing retirement advice.”
Perez has “a lot of deep experience in tackling tough issues; this is a tough issue,” Kelleher said.
In mid-March, Perez, a graduate of Harvard Law School who has served as the assistant attorney general for the civil rights division of the United States Department of Justice, noted the “importance” of the DOL fiduciary plan, stating that a redraft would be arriving “in the coming months,” and that DOL would continue its “due diligence” on the rulemaking.
After being bombarded with industry pushback, Phyllis Borzi, assistant secretary of labor for DOL’s Employee Benefits Security Administration, the main architect of the fiduciary proposal, withdrew the initial plan in 2010 and then took to redrafting the rule that she has called DOL’s “No.1 priority.”
Borzi stated at a Financial Services Roundtable event in mid-March that a redraft may come before or after August.
A DOL fiduciary rule is needed, Borzi stressed at the event, because “just like the marketplace has evolved, our structures for monitoring and regulating the marketplace need to evolve as well.”
Indeed, Kelleher noted that “DOL is required under the law to protect retirees, and that law [ERISA] has not been updated since President Nixon” was in office.