California Public Employees’ Retirement System
Executive Office

P.O. Box 942701
\ ip Sacramento, CA 94229-2701
A yy, TTY: (877) 249-7442
C alPERS (916) 795-3829 phone * (916) 795-3410 fax

www.calpers.ca.gov

July 16, 2015

Phyllis C. Borzi

Assistant Secretary

Employee Benefits Security Administration
U.S. Department of Labor

200 Constitutional Avenue, NW
Washington, DC 20210

Dear Ms. Borzi:

Re: Definition of the Term “Fiduciary”; Conflict of Interest Rule—Retirement Investment
Advice

The California Public Employees’ Retirement System (CalPERS) supports efforts by the
Department of Labor (Department) to update the employee benefit plan definition of
“fiduciary” under Employee Retirement Income Security Act of 1974 (ERISA). Although
the proposed rule does not impact CalPERS, it does impact our members who have
retirement savings outside of our system. The concept behind the Proposed Rule and
exemptions appear to increase transparency, better protect the integrity of the
retirement benefits, and compel financial professionals who provide retirement
investment advice and products to act in their clients’ best interest.

For more than eight decades, CalPERS has built retirement security for state, school,
and public agency members who pursue careers in public service. Our pension fund
serves more than 1.7 million members.

CalPERS believes that fiduciaries should be accountable for their actions, and must
transparently perform their duties to the highest ethical standards. The Proposed Rule
appears to align with CalPERS beliefs on fiduciary responsibility and we support the
Department's efforts to “safeguard plan participants by imposing trust law standards of
care and undivided loyalty on plan fiduciaries, and by holding fiduciaries accountable
when they breach those obligations.” Furthermore, CalPERS supports increased
transparency efforts beyond the requirements of the Proposed Rule.


Phyllis C. Borzi
duly 16, 2015
Page 2

CalPERS also believes that Americans should have effective means to pursue
retirement security. In the last 40 years, the way Americans save and invest for
retirement has changed significantly. Individual retirement accounts (IRAs) and defined
contribution plans such as a 401(k) have largely replaced defined benefit pension plans
in the private sector. Currently, more than 40 million American families have more than
$7 trillion in IRAs. These families must make critical investment and retirement
decisions in a complex financial market place, which has created the need for financial
professionals to assist with these important decisions. Under current rules, financial
professionals may offer investment advice without disclosing conflicts of interest. This
could cost IRA investors as much as $1 trillion over the next 20 years. The Proposed
Rule appears to be congruent with CalPERS belief that all Americans should have
effective means to pursue retirement security.

Thank you for the opportunity to provide comments and we commend your efforts to
increase transparency, protect the integrity of retirement benefits, and provide
opportunities to increase retirement security for all Americans.

Respecttully,

B~ L Paqrtr

ANN BOYNTON
Deputy Executive Officer
Benefit Programs Policy and Planning