Securian Retirement

400 Robert Street North

St. Paul, MN 55101-2098
SecurianRetirementCenter.com

July 21, 2015 Va

Mailed Electronically SECURIAN

Employee Benefits Security Administration
Office of Regulations and Interpretations
U.S. Department of Labor

200 Constitution Avenue, NW

Room N-5655

Washington, DC 20210

Office of Exemption Determinations
Employee Benefits Security Administration
U.S. Department of Labor

200 Constitution Avenue, NW

Suite 400

Washington, DC 20210

Subject: Definition of the Term “Fiduciary”; Conflict of Interest Rule—Retirement Investment Advice
{RIN 1210-AB32);
Proposed Amendment to and Proposed Partial Revocation of Prohibited Transaction
Exemption (PTE) 84-24 for Certain Transactions Involving Insurance Agents and Brokers,
Pension Consultants, Insurance Companies and Investment Company Principal Underwriters
{RIN 1210-ZA25); and
Proposed Best Interest Contract Exemption (RIN 1210-ZA25)

To Whom it May Concern:

This letter contains the comments of Securian Financial Group (“Securian”) with respect to the
Department of Labor’s notice of proposed rulemaking concerning the Definition of the Term “Fiduciary”
of an employee benefit plan (the “Proposed Regulation”), the related proposed Best Interest Contract
Exemption, and the proposed amendment to prohibited transaction exemption 84-24 (collectively, the
“Proposal”).

Securian is one of the nation’s largest and strongest financial services providers. Founded in 1880 as
Minnesota Mutual, Securian has remained headquartered in St. Paul, Minnesota for its entire 135-year
history. Our 5,000 associates and representatives work to provide life insurance, investment and
retirement solutions to our clients throughout the country.

We support the administration’s goal in ensuring that retirement savers get the best advice for their
investment objectives, risk tolerance and financial needs. We support clear disclosures and honest
education that help a consumer understand their investment decisions. In general, however, we are
concerned about the Proposal because it is overly burdensome, costly and will result in consumers being
left in a significantly worse position with less access to advice and limited options for savings.

Securian Retirement is a unit of Minnesota Life Insurance Company, a Securian company.
Registered products are distributed by Securian Financial Services, inc., Member FINRA/SIPC. * 400 Robert Street North, St. Paul, MN 55101-2098

F56264 Rev 2.2009


In this regard, we fully support the concerns raised in the comment letters from the American Council of
Life Insurers, Insured Retirement Institute and Financial Services Roundtable regarding the Proposal.
We also want to take this opportunity to highlight some concerns specific to Securian.

Definition of “Insurance Commission” in PTE 84-24

Section IV(b)(1){B) of proposed PTE 84-24, states “[t]he Insurance Commission, expressed as a
percentage of gross annual premium payments for the first year and for each of the succeeding renewal
years, that will be paid by the insurance company to the agent, broker or consultant in connection with
the purchase of the recommended contract.” The concern with this language is insurance Commission
for Securian’s annuity products is not defined as a percentage of “gross annual premium payments” but
rather as a percentage of the asset accumulation value at the end of each quarter. In fact, the insurance
and financial services industry generally describes annuity payments as “purchase payments” or
“contributions” rather than “premiums.” Typically, the term “premium” is used to describe payment on
an insurance policy.

Adviser compensation is generally tied to the accumulation value of an annuity contract and not to the
amount of contributions or to the investment options selected by the plan fiduciary. As such, the
Adviser has a vested interest in the growth of the accumulation value of the contract. Therefore, we
respectfully request the Department of Labor modify the reporting requirement of Insurance
Commission on the proposed PTE 84-24 to include not only “gross annual premium payments” but
also “asset accumulation value” and “contract value.”

With these changes, the “Insurance Commission” disclosure and PTE 84-24 would be the same as the
compensation disclosure under 408(b)(2). The disclosure of the same amounts, calculated in the same
way, would avoid confusion by plan fiduciaries and participants who might otherwise receive
information that appeared to be conflicting.

Statutory Employees Benefits under PTE 84-24

Securian Advisers are treated as statutory employees and are provided the opportunity to participate in
both a company sponsored health plan and a company sponsored 401(k) retirement plan. Securian
subsidizes the health insurance premiums for the statutory employees based upon the statutory
employee’s sales. Sales included for this purpose include sales of both proprietary or nonproprietary
products, These statutory employees are permitted to contribute to the 401(k) retirement plan based
upon their individual earnings subject to FICA withholding. Securian also makes a contribution to the
retirement plan which is a percentage of the statutory employee’s earnings subject to FICA withholding.
PTE 84-24 does not address whether the offering of company sponsored health benefits and retirement
benefits would prevent all transactions of an adviser, who participates in such employer sponsored
plans, would be precluded from qualifying for the use of PTE 84-24. Since current public policy strongly
encourages employers to provide both health and retirement benefits to their employees, we
respectfully request the Department of Labor clarify that the offering of such employer sponsored
benefits will not preclude the use of PTE 84-24.

Similar issues exist in the proposed Best Interest Contract Exemption. We respectfully request the

Department of Labor clarify in that exemption that credits for retirement plans and health care are

not incentive compensation that could influence a fiduciary adviser to make biased _
recommendations,

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Qualified Plans - Pass Through of 12B-1 Fees

Proposed PTE 84-24 limits the type of compensation that may be received by an adviser, broker or
pension consultant for the service of effecting the purchase or sale of an insurance or annuity contract
to “Insurance Commission” which includes “renewal fees and trailers, but not revenue sharing
payments, administrative fees or marketing payments, or payments from parties other than the
insurance company or its Affiliates.” Since the inception of Securian’s 401(k) product in the early 1990s,
it has been Securian’s practice to credit back any 12b-1 fees or revenue sharing payments to the
appropriate separate accounts. This restores the 12b-1 fee or revenue sharing to the participant who
held the investment that generated the payment. Securian credits the separate accounts the
appropriate amount of 12b-1 fees and revenue sharing payments ona daily basis even though it
receives these payments on a monthly or quarterly basis. Participants recognize the daily pass back in
the form of a separate account operating expense reduction. We respectfully request that the
Department of Labor clarify that the receipt of 12b-1 fees and revenue sharing payments that are
credited daily, through an insurance company separate account, to participants and not retained by
the adviser, broker dealer or the insurance company (or any affiliate) is acceptable and allowed for
under the proposed PTE 84-24,

We appreciate the opportunity to provide comments.

WA

Rick Ayers
Vice President, Retirement Plans
Securian Financial Group

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