The House Subcommittee on Health, Employment, Labor, and Pensions on Thursday called on Employee Benefits Security Administration (EBSA) Assistant Secretary Daniel Aronowitz to testify over the policies and priorities of the agency.
“Today’s hearing will examine the policies and priorities of the Employee Benefits Security Administration (EBSA) under the leadership of Assistant Secretary Daniel Aronowitz,” said Chairman Rick Allen (R-GA) in opening statements. “The Committee is focused on protecting workers, lowering costs, and restoring accountability in our benefits system. Simply put: retirement and health benefits must actually work for American families. Today, we will hear about the ways the Trump administration is advancing these priorities.”
During the hearing, Aronowitz was asked about the impacts of market volatility on investment returns, and if private market investments could mitigate the uncertainty. He noted that diversification strategies could be integral to protecting against volatility but made no mention on concerns regarding liquidity risk and higher fees associated with alternative assets.
“We mentioned modern portfolio theory, which is an investment that maximizes risk adjusted returns through diversification and optimal asset allocation…We were asset neutral [in our rule], we’re not picking winners and losers, but we’re hoping to give plan fiduciaries confidence and a roadmap to offer alternatives that may or not may not be right for their plan participants,” Aronowitz stated.
The Department of Labor previously released its proposed regulation, “Fiduciary Duties in Selecting Designated Investment Alternatives,” on March 30. The proposed regulation explains the steps that managers of 401(k) plans should take when considering alternative assets as a component in their investment lineups and establishes a set of process-based safe harbors for plan fiduciaries to use when selecting designated investment alternatives.
It follows President Trump’s Aug. 7, 2025 Executive Order, “Democratizing Access to Alternative Assets for 401(k) Investors.”
A 60-day comment period has since started, anticipated to end at the end of May.
‘Pro-ESOP’ principles
Aronowitz was also asked about EBSA’s relationship with employee stock ownership plans, and how the agency expects to change its approach with the plan types. EBSA was previously accused of operating on an “anti-ESOP” bias that deterred plan sponsors from offering the benefits by launching investigations on employers who offer the plans.
Aronowitz touched on the agency’s recently released field assistance bulletin 2026-01 in his comments. He highlighted one of the FAB’s four principles that states the agency will not regulate through enforcement, even for the current 90 pending ESOP investigations at EBSA.
“We are pro-ESOP. We just put out guiding principles that we’ve been using where we will not regulate through enforcement. Until we put out the valuation guidance that Commerce has asked for, we will not second guess plan fiduciaries in their judgements. We focus on the duty of loyalty,” stated Aronowitz. “We are going to treat ESOPs fairly like all other retirement plans. We’re ending that war on ESOPs.”