Just as the House Appropriations Committee plans to vote on — and likely approve — on Wednesday a funding bill that would block progress on the Department of Labor’s fiduciary rule under ERISA, Labor Secretary Thomas Perez stated Tuesday that the rule is “one of the most important” measures DOL has on its plate to protect middle-class Americans.
“We want to create an enforceable best-interest standard” because the existing retirement advice regulatory system under the Employee Retirement Income Security Act was created 40 years ago, Perez said during a speech at the Brookings Institution in Washington. “We need to get into the modern ages of regulation. This [fiduciary rulemaking under ERISA] will be a sea change for some.”
At the event, held by Brookings’ Hamilton Project, Perez stated that the comments that are coming on the fiduciary redraft are helping DOL to “sharpen” its thinking on how to make changes to the plan’s prohibited transaction exemptions, like the point of sale disclosure requirements.
Perez noted the fiduciary redraft was among the top priorities for DOL in the “577 days remaining” until Jan. 20, 2017 — the day President Barack Obama leaves office — to “help strengthen and grow the middle class.”
The DOL fiduciary redraft is out for public comment until July 21, with the department to then hold a public hearing for several days starting Aug. 10 on the redraft. DOL will also accept comments on the transcript of that hearing.
The Financial Planning Association, which met with DOL on Tuesday as part of its annual advocacy day, plans to send a “very comprehensive” comment letter, said Janet Stanzak, FPA’s 2015 chairwoman, during a media roundtable the same day. While FPA “broadly supports” DOL’s fiduciary redraft, she stated, FPA will comment that the current redraft’s eight-month timeframe for implementation is “too short,” and FPA will also recommend ways to streamline the plan’s “reporting and disclosure” requirements.
Edward Gjertsen, FPA’s 2015 president, stated during the roundtable that while critics complain the DOL fiduciary rulemaking would cause big firms to abandon middle-market clients, “there are plenty of advisors who would be willing to take on smaller clients that the larger firms spurn.”
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