Jeanne Klinefelter Wilson, acting assistant secretary for the Employee Benefits Securities Administration at the Department of Labor took to the pages of Barron’s on Friday to defend the agency and its actions in the wake of recent controversy.
Arguing that EBSA has worked on consequential rulemakings during the Trump Administration, she said, “Protecting retirement savings is a pillar of our work” and “fiduciary standards are commonsense moral and legal precepts: Plans and the people running them must keep their promises, manage benefit plans with undivided loyalty to the workers who earned the benefits, and adhere to the highest standard of care known to the law.”
The agency has come under fire recently for allowing private equity investments in 401k menus and similar defined contribution-style plans, which critics say are complicated and fee-laden unsuited to the retirement vehicle. It’s recent guidance on ESG and sustainable investing has also been heavily criticized.
The issue of missing participants has been an agency priority for some time, with former EBSA head Preston Rutledge noting at the NAPA 401(k) Summit 2019 that “We want to understand the process and procedures [for finding missing participants] up until now so we can better understand.”
However, he added at the time that audits have rightly focused on whether benefits have not been paid for some time.
“The purpose of a [defined contribution] is to make sure accrued benefits are paid. There’s so much focus on the accumulation of benefits, but what’s the point if they’re not paid.”
In her piece, Klinefelter Wilson pointed to a national program aimed at making sure that plans and employers keep track of their retirees and beneficiaries, notify them of their rights, and keep their promise to pay them benefits.
“Last year, EBSA recovered almost $1.5 billion nationwide for these plan participants,” she wrote. “Plans and employers have taken notice of the investigations and are taking greater care to make sure that employees and beneficiaries receive promised benefits.”
Fiduciary rule fight
She also referenced the Department’s latest version of its Conflict of Interest Rule, also known as the fiduciary rule, which again, has been heavily criticized for what detractors see as a watered-down document too beneficial to industry interests.
“We have also proposed a new regulation that would promote beneficial advice for retirement investors while requiring that the adviser act in the investor’s best interest as a fiduciary,” Klinefelter Wilson concluded.
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.
