Council commends DOL on development of process-based retirement plan investment rule

Proposal emphasizes fiduciary discretion, as Council has recommended

WASHINGTON, DC – “The proposed rule released today by the U.S. Department of Labor wisely affirms the ‘prudence’ standard established by ERISA, giving retirement plan fiduciaries broad discretion and deference when offering plan investment options to participants,” said Lynn Dudley, American Benefits Council senior vice president, global retirement and compensation policy.

While the impetus for, and focus of, the proposed rule is the White House Executive Order directing regulators to expand retirement plan participants’ access to alternative assets (such as private equity), the DOL’s approach is not prescriptive about the offering of any specific investments. Instead, as urged by the Council, the proposed rule emphasizes an asset-neutral, ERISA-compliant process for selecting a defined contribution plan investment menu, with significant deference to fiduciary decisions.

“This asset-neutral, process-based approach and fiduciary safe harbor offers critically important reassurance to plan sponsors, who are now enduring a wave of specious, baseless class-action litigation from the plaintiffs’ bar,” Dudley said. The Council’s concerns about baseless litigation are cited repeatedly in the proposal, in footnotes 30, 32, 65, 82, 133-135, and 207:

• Council Letter to EBSA Proposing Asset-Neutral, Process-Based Safe Harbor for Retirement Plan Investments

• The Proliferating Risk of Baseless Retirement Plan Litigation is Harming Plan Participants and Retirement Security

“We commend the DOL for validating the concerns of employers and developing a process-based approach for plan fiduciaries to follow with respect to investment selection,” Dudley said. “We look forward to working further with administration officials to ensure that the rule advances our shared goal: greater retirement savings access and opportunities for American workers.”

For more information on retirement policy, or to arrange an interview with Council staff, please contact Jason Hammersla, vice president, communications, at (202) 422-4652 or jhammersla@abcstaff.org.

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