On Thursday, the Senate Health, Education, Labor, and Pensions (HELP) Committee will once again consider the nomination of Lisa Gomez to be Assistant Secretary for the Employee Benefits Security Administration (EBSA) at the Department of Labor.
The Senate-confirmed position oversees EBSA, which is tasked with regulation and enforcement of private-sector retirement and health plans, including nearly 722,000 retirement plans, 2.5 million health plans, and other benefits plans in the amount of $10.7 trillion dollars.
The White House announced in July that President Biden chose Gomez for the post, following Preston Rutledge, Jeanne Klinefelter Wilson, and Ali Khawar, who was acting assistant secretary. However, because the Senate failed to act before Congress adjourned for the holiday, the HELP committee must reapprove the nomination before sending it for full confirmation, according to the National Association of Plan Advisors.
Gomez is a partner with New York City-based law firm Cohen, Weiss and Simon LLP and the Chair of the Firm’s Management Committee.
If confirmed by the Senate, Gomez would likely play a key role in determining the regulatory approach for a number of significant high-profile issues making headlines in the past year.
Among them:
• Changing the definition of fiduciary: Back in June, the DOL revealed it is officially looking to change the definition of fiduciary, with the OMB’s Office of Information and Regulatory Affairs listing the DOL and the EBSA as proposing a rule that would “amend the regulatory definition of the term fiduciary set forth at 29 CFR 2510.3-21c.
It would “more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries within the meaning of section 3(21) of ERISA and section 4975(e)(3) of the Internal Revenue Code.”
In conjunction with this rulemaking, OMB said EBSA will also “evaluate available prohibited transaction class exemptions and consider proposing amendments or new exemptions to ensure consistent protection of employee benefit plan and IRA investors.”
• ESG investing: In March, EBSA announced that it would not enforce recently published final rules on “Financial Factors in Selecting Plan Investments” and “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights,” stating the department intends to revisit the rules based on feedback from a wide variety of stakeholders.
“These rules have created a perception that fiduciaries are at risk if they include any environmental, social and governance factors in the financial evaluation of plan investments, and that they may need to have special justifications for even ordinary exercises of shareholder rights,” Khawar said in a statement at the time. “We intend to conduct significantly more stakeholder outreach to determine how to craft rules that better recognize the important role that environmental, social and governance integration can play in the evaluation and management of plan investments while continuing to uphold fundamental fiduciary obligations.”
• Cybersecurity guidance: Back in April, the DOL announced new guidance for plan sponsors, plan fiduciaries, recordkeepers and plan participants on best practices for maintaining cybersecurity, including tips on how to protect the retirement benefits of America’s workers.
This was the first time the department’s Employee Benefits Security Administration has issued cybersecurity guidance. This guidance is directed at plan sponsors and fiduciaries regulated by the ERISA, and plan participants and beneficiaries.
• Missing participants: In January, the EBSA issued long-awaited guidance on missing retirement plan participants, calling it part of its effort to help plan fiduciaries meet their obligations under ERISA to locate and distribute retirement benefits to missing or non-responsive participants.
EBSA outlined best practices that it has found “effective at minimizing and mitigating the problem of missing or non-responsive participants,” applicable to both defined benefit and defined contribution plans.
• Private equity in DC plans: The department’s June 2020 private equity Information Letter, issued to Groom Law Group on behalf of two of its clients—marked the first time DOL has addressed the use of private equity in defined contribution retirement plans.
The Information Letter confirmed that plan fiduciaries can prudently offer private equity as part of an ERISA plan’s diversified investment option, such as a TDF, within a DC plan. It assists plan fiduciaries by providing detailed guidance on the important considerations for demonstrating a prudent process when considering private equity investments.
401(k) Specialist Managing Editor Brian Anderson contributed to this article.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
