Plan Sponsor Council of America

Serving reU'rement plan sponsors for over 60 years

September 24, 2015

VIA EMAIL (e-ORI(S), dol. eov)

Office of Regulations and Interpretations,

Employee Benefits Security Administration

Attn: Conflict of Interest Rule, Room N-5655,

U. S. Department of Labor,

200 Constitution Avenue NW.,

Washington, DC 20210.

Re: Definition of the Term "Fiduciary;" Conflict of Interest Rule (RIN 1210-AB32)

Dear Sir or Madam:

The Plan Sponsor Council of America ("PSCA") submitted written comments on the

United States Department of Labor's ("DOL") proposed changes to the definition of a

"fiduciary" imder the Employee Retirement Income Security Act of 1974, as amended

("ERISA"), and the Internal Revenue Code of 1986, as amended ("Code"), and its proposed

Best Interest Contract Exemption" (the "BIG Exemption") (collectively referred to herein as

the "Proposed Rule"). Our comments were submitted on July 21, 2015. Subsequently, on

August 10, 2015, PSCA's Board Chainnan Stephen McCaffrey offered testimony on behalf of

the PSCA before the DOL's Employee Benefits Security Administration at its hearing on the

Proposed Rule. The PSCA appreciates these opportunities to express our views on the Proposed

Rule, and, as we have noted previously, particularly appreciate the willingness of the DOL to

consider those views.

The PSCA was established in 1947 and is a leading consumer advocate for employers

offering defined contribution and non-qualified deferred compensation plans to their employees.

' 80 Fed. Reg. 21, 927 (Apr. 20, 2015).

2 Mat 21, 960.

3 Id. at 22, 004; Id. at 22, 010; Id. at 22, 021; Id. at 22, 035.

1900 K Street, N.W., Suite 1110, Washington, D.C. 20006
Office of Regulations and Interpretations

Employee Benefits Security Administration

Page 2

The PSCA is a diverse, collaborative community of employee benefit plan sponsors and related

service providers working together on behalf of millions of employees to ensure the success of

the voluntary einployer-sponsored retirement system. Representing employers of all sizes and

industries throughout the country, we offer a unique and valuable perspective on issues regularly

confronted by that system.

As noted in our initial written comments, and as expressed by Mr. McCaffrey in his

testimony, the PSCA supports the core approach of the Proposed Rule in extending the

protection ofERISA's fiduciary standards and commends the DOL for its efforts to carefully

construct a balanced approach in this context. We appreciate and support the view that

extending ERISA's protections in situations that function in a fiduciary capacity would provide

meaningful protection for both plan participants and plan sponsors. We have stated our belief

that our country's retirement system will be greatly strengthened by ensuring that investment

advice is provided in the recipient's best interest consistent with those fiduciary standards and

that any financial conflicts are disclosed. In that regard, we previously noted that many PSCA

members regard the proposed revision as beneficial in solving a crucial problem in their efforts

to help employees save for retirement. While we appreciate and support the DOL's efforts to

protect plan participants by extending ERISA's fiduciary standards in appropriate circumstances,

this objective should be met without compromising the ability of plan sponsors to obtain the

broad array of services that fit the needs of their plan participants. Striking the proper balance is

very important. Those concerns have been set forth in our previous comments and testimony,

and generally will not be repeated herein.

The PSCA continues to believe that the final rule should be formulated in a manner that

ensures that plans of all sizes will be able to offer meaningful efficient and cost effective

investment education to participants. We have set forth our views on how to obtain that goal in

our previous comments and testimony.

Our review of submitted comments and offered testimony indicates that many adverse

coimnents are based on concerns that the scope of the rule, as proposed, may be overly broad.

The PSCA generally shares this concern and believes that greater clarity can be achieved by

adding to the rule additional examples, lists and/or model language that would sharpen the

distinction between what would be considered investment "recommendations" and mere "neutral,

informative descriptions" of plan or IRA operations, investment options or taxation. Attached

hereto as Exhibit A is a partial list, which is not meant to be exclusive, of the type ofinfonnation

that the PSCA believes should be disseminated without crossing the line into investment advice.

In this regard, the PSCA believes that its members possess valuable practical experience in these

matters, and would welcome the opportunity to actively work with the DOL in constructing

additional examples, lists and/or model language.

The PSCA recognizes the DOL's concern about steering participants to particular

investments. However, we continue to believe that the identification of specific investment

options in asset allocation models and interactive investment materials helps participants

understand and "connect the dots" between general information on asset allocation and

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Office of Regulations and Interpretations

Employee Benefits Security Administration

Page 3

corresponding investments) in a plan to enable them to make an informed decision on their

investments. Moreover, the PSCA's independent, unbiased research suggests the Proposed Rule

potentially would increase burdens on plan sponsors that rely on (a) vendors to provide

participant education and (b) bundled, diversified asset allocation products (e. g. target date funds,

balanced funds, lifestyle funds) to improve plan participation (particularly among rank and file

employees). As such, PSCA is concerned that the Proposed Rule inadvertently could decrease

the value and effectiveness of investment education. Without the tie-in to specific investment

options available under a plan, the risk that a participant fails to fully appreciate, learn from the

education and actually participate in the plan increases.

The PSCA is concerned that a narrowed IB 96-1 could have unintended consequences

that would be particularly hannful to employers and participants. For instance, in addition to

decreasing the value and effectiveness of investment education (as discussed above), plan

sponsors are concerned that the availability of educational services will be limited or become

more costly. That is, if materials and activities that currently are treated as education instead are

characterized as investment advice, providers may cease offering these services or may impose

advisory-level fees, making the information unattainable for many employees. As the submitted

comments and testimony from other stakeholders amply indicate, the concern is shared by many.

For the reasons set forth in our previous comments, the PSCA continues to believe that

the DOL should preserve IB 96-1 in its entirety. However, to the extent the DOL is unwilling to

do so, the PSCA believes that there are other ways to permit the identification of specific

investment options without risking the abuses cited by the DOL. Proposals that are based on

neutral, informative descriptions of the participant's options should be permissible. In that

regard, the focus should be on the factually comparative nature of the infonnation and whether it

is being provided in a manner that does not rise to the level of a recominendation. While not

meant to be an exclusive list, the PSCA wants to highlight the following proposed alternatives in

this regard:

1. permit the identification of specific investment options when the education is paid

for on a fixed and unconflicted basis;

2. pennit the identification of specific investinent options when the education is

provided by an independent third-party;

3. permit the identification of specific investment options when the education

discloses each available plan option in a given asset class; and/or

4. permit plans to continue relying on paragraphs (d)(3)(iii) and (4)(iv) ofIB 96-1,

but do not extend this ability to IRAs (based on the fact that the marketplace for

employee benefit plans is considerably different from the marketplace for IRAs

since while IRA owners have access to an unlimited universe of investoents, plan

participants and beneficiaries must select investments from a lineup selected by

prudent plan fiduciaries).

Other stakeholders have made similar suggestions in their comments and/or testimony. The

PSCA continues to believe that each of these alternative solutions address the concerns raised by

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Office of Regulations and Interpretations

Employee Benefits Security Administration

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the DOL and still permit plan sponsors to continue (albeit potentially at a greater cost) to be

confident in the value and effectiveness of the education provided - which is a goal we all share.

The PSCA would welcome the opportunity to work with the DOL as it considers these and other

alternatives.

In summary, the PSCA recognizes and applauds the DOL's efforts to maximize fiduciary

protection for plan sponsors, participants, beneficiaries and IRA owners while preserving

flexibility within plans. We appreciate that the DOL has attempted to maximize this protection

while mindful of the need to preserve and even encourage a vibrant investment education

prograin. As in years past, PSCA wishes to be a resource to the DOL as this evaluation process

moves forward to the issuance of a final rule. We appreciate the opportunity to comment and

look forward to working with the DOL to achieve these goals.

Respe lly submitted,

chard . M gh

ice President o hington Affairs

1900 K Street, N.W., Suite 1110, Washington, D.C. 20006
Exhibit A

As we have noted, the PSCA is concerned that without clarification almost any

information provided to a participant can be interpreted as an investment recoinmendation under

the Proposed Rule. This concern seems particularly relevant in the context of IRA rollovers,

when we believe dissemination of basic information (e. g., plan distribution options, taxation

considerations and other related implications of a distribution and/or rollover) should not be

treated as an investment recommendation for this purpose. The PSCA believes that the final rule

should be clarified to make clear that the provision of the following forms of information would

not be treated as providing investment advice:

1. Information about a plan's distribution options;

2. Taxation considerations;

3. Other practical implications of a plan distoibution or rollover;

4. Practical implications of leaving account balances in a plan post-employment fe. g.. fee

and expense implications and any limitations of access to account balances);

5. Basic infonnation regarding the ability to create a rollover IRA or to consider a planto-plan transfer to a plan sponsored by a successor employer;

6. General financial information related to estimating future retirement income needs and

how those considerations are affected by plan distribution options; and

7. General infonnation related to the purchase of an annuity product, whether within the

plan or outside.

1900 K Street, N.W., Suite 1110, Washington, D.C. 20006