ERISA Penalty Box

ERISA 2013 Trends - Increased Enforcement, Confusion, Fear, Backlash

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Surveys, facts and trending reveal a confused and nervous marketplace and that participants are concerned about their fees and calling the DOL.

As we move into the second half of 2013, let’s take a look at some of the meaningful trends as the new ERISA regulatory requirements take hold.

  • June 2011: Towers Watson study revealed the following top three items on plan sponsors’ minds for the next two years:
    1. Regulatory compliance;
    2. Investment volatility; and
    3. Vendor service quality.
  • In the 12 months ending October 1, 2012, more than 300 EBSA investigators in 10 regional offices closed 3,566 investigations, resulting in a total of $1.27 billion in fines.  Over a quarter of those investigations resulted from participants inquiries.
  • In June 2013, a Cogent study indicated that more than 51% of plan sponsors will modify their investment line-up over the next 12 months and that fee disclosures are prompting many of the changes with 21% interested in lowering fee share classes.
  • In a 2011 AARP Participant Fee Survey, 70% think that their 401(k) assets are being managed for free.
  • In President Obama’s FY 2014 budget proposal submitted to Congress April 10, 2013, the SEC requested an additional $250 million, much of which would be used to hire an additional 325 examiners. In 2012, the SEC examined only 8% of the RIA firms under their jurisdiction while FINRA examined 45%-55% of the nation’s 4,600 broker dealers.

As these complex disclosure requirements come into play, there is still an enormous amount of chaos and confusion in the marketplace. 

Because of the high level of confusion and lash back, the Department of Labor (“DOL”) announced an extension to plan administrators in the ( Field Assistance Bulletin (“FAB”) 2013-02) on July 22, 2013 outlining a transitional enforcement policy for the second round of required participant disclosures under the new 404(a)(5) regulations.,

Take action and advantage of the opportunities to help plan sponsors with their disclosure requirements to participants - the need for education has never been greater! 

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Amy Glynn

Amy Glynn is President and Founder of the Pension Resource Institute, a nationwide consulting firm helping organizations build and maintain compliant and competitive strategies in the ERISA...
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