A large faction of financial services and insurance industry stakeholders have asked the Labor Department to delay implementation of the fiduciary rule beyond the proposed 60 days.
The Securities Industry and Financial Markets Association, Spark Institute, National Association for Fixed Annuities, and the Insured Retirement Institute are among the industry organizations lobbying for a 180-day delay of the rule’s April 10 implementation date. The American Retirement Association has requested the first implementation date be delayed until January 1, 2018.
In comment letters to the Labor Department, the trade groups argue that the economic and legal analysis of the rule ordered by the White House will take longer than the proposed 60-day delay. The comment period for the proposed delay closed March 17.
Stakeholders have another three weeks to submit comments specific to Labor’s new analysis of the rule. That comment period is scheduled to close after the April 10 implementation date.
More than 1,000 comment letters were submitted regarding the proposed 60-day delay. The Department has indicated it will publish its determination on the proposed delay before April 10.
The ERISA Industry Committee, which advocates for large employers on retirement and health benefits, said it supports a 60-day delay, “at a minimum,” in its comment letter.
Will Hansen, senior vice president for retirement policy at ERIC, told BenefitsPro that plan sponsors have been receiving mixed messages from retirement plan service providers since President Trump issued the memorandum instructing Labor to execute a new review of the rule.
“Some service providers have been delaying their notifications to plan sponsors,” said Hansen. “For our members this a matter of certainty.”
The final rule’s clarification on plan education and guidance for human resource departments satisfied ERIC’s original concerns with the rule when it was proposed in 2015, according to Hansen.
But sponsors’ lack of clarity — and not the provisions of the rule — warrants the delay, said Hansen.
“Speculation over the delay should not have impacted notification to plan sponsors,” he added. Without notification and contractual clarity regarding how record keepers’ services will change under the rule, sponsors are unable to clearly communicate with participants regarding potential changes to plan administration.
That leaves sponsors “looking like the bad guy” in the eyes of participants, said Hansen.
While ERIC’s members are mixed on the merits and utility of the fiduciary rule, “a large majority of our members can point to instances where it would be beneficial to plan participant,” he said.
Ultimately, sponsors need to understand how their contracts with service providers will be impacted, irrespective of whether the rule is implemented as written, or if it is revised, Hansen underscored.
“If services decrease, all sponsors want is time to analyze the impact and determine where they are able to fill in the gaps,” he said.
“Plan sponsors want to assure participants have the ability to retire and that they are receiving best-in-class advice — ultimately, that’s where our members land on the fiduciary rule,” he added.
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