Department of Labor: Spring 2021 Regulatory Agenda
The Department of Labor (“DOL”) recently released its Spring 2021 Regulatory Agenda (found here), which outlines the DOL’s regulatory plans for the coming months. Among multiple other topics, the DOL’s Spring 2021 Regulatory Agenda confirms that a fiduciary rule rewrite is being prepared.
The priorities include:
New Fiduciary Rule.
This new rule would amend the regulatory definition of the term “fiduciary” set forth in 29 CFR 2510.3-21(c). Specifically, it would address when persons who render investment advice (for a fee) to employee benefit plans or IRAs are considered fiduciaries.
The new definition of a “fiduciary” will be issued by a Notice of Proposed Rulemaking (“NPRM”) from the Employee Benefits Security Administration (“EBSA”) in December 2021.
Voluntary Fiduciary Correction Program.
The EBSA plans to amend and restate its Voluntary Fiduciary Correction Program (“VFCP”) under the Employee Retirement Income Security Act (“ERISA”). As per the DOL Spring 2021 Regulatory Agenda, “[t]he VFCP is designed to encourage the voluntary correction of fiduciary violations by permitting persons to avoid potential civil actions and civil penalties if they take steps to correct identified violations in a manner consistent with the VFCP”.
EBSA will issue a restatement of the VFCP in its entirety and request public comments. EBSA also plans to propose an amendment to the related prohibited transaction class exemption. The DOL Spring 2021 Regulatory Agenda shows that EBSA plans to issue an Interim Final Rule by September 2021.
Form 5500.
This priority aims to implement certain provisions of the Setting Every Community Up for Retirement Enforcement Act (“SECURE Act”), which required changes to Form 5500 Annual Return/Report of Employee Benefit Plan and related regulations under ERISA. The DOL plans to issue a NPRM on this subject by June 2021.
Lifetime Income Illustrations.
ERISA requires plans to provide participants with individual pension benefit statements. A new rule under the DOL Spring 2021 Regulatory Agenda, which reflects changes under Section 203 of the SECURE Act, will add a lifetime income illustration to pension benefit statements furnished to participants in certain defined contribution plans.
While an interim final rule was published in September 2020, the DOL plans to issue a final rule by July 2021.
Climate Risks and ESG.
Executive Orders 13990 of January 20, 2021, titled Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, and Executive Order 14030 of May 20, 2021, titled Climate-Related Financial Risk (together, the “ESG Executive Orders”), call for Federal agencies to review their existing regulations to ensure they include the promotion and protection of public health and the environment. Therefore, the EBSA will undertake a review of the following regulations: “Financial Factors in Selecting Plan Investments” and “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights” to ensure they comply with the ESG Executive Orders.
Note that the dates listed in the DOL Spring 2021 Regulatory Agenda are target dates for release and are subject to change.
If you have any questions about this Alert, or any other regulatory matters, do not hesitate to reach out to Daniel Viola (Partner – Head of the Regulatory Group) at 212.573.8038 or via email at dviola@sadis.com, or to Nicole Arrow (Associate) at 212.573.8148 or via email at narrow@sadis.com.
