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Among the issues discussed during the quarterly meeting in June were the November 2015 reports of the Advisory Council on Employee Welfare and Pension Benefit Plans, known as the ERISA Advisory Council. The 15-member council was established under the Employee Retirement Income Security Act of 1974 (ERISA) to advise the U.S. Secretary of Labor on carrying out his/her responsibilities under the Act.
The ERISA Advisory Council focused on two areas in 2015: information needs of plan participants and disclosure practices of plan sponsors when engaging in defined benefit plan risk transfer transactions; and information needs of plan participants and plan sponsors on the considerations and benefits to participants of retaining assets within the employer-sponsored system. Both projects built on the work of earlier ERISA Advisory Councils and resulted in Model Notices and other best practices for education and disclosures for plan sponsors to help participants make important decisions regarding their plan participation.
The “Model Notices and Disclosures for Pension Risk Transfer” report recommends the use of the Model Notices for two types of pension risk transfer transactions: lumps sums, and insurance company risk transfers. The Model Notices were developed with input from the public to provide plan participants with useful, concise, and unbiased information that explains the pros and cons of a risk transfer transaction.
The report entitled “Model Notices and Plan Sponsor Education on Lifetime Plan Participation” provides plan sponsors with sample participant notices and objective educational materials to help participants to decide what to do with their retirement assets, particularly at a job change, retirement, or other distribution event, to encourage lifetime plan participation and retaining assets within the employer-sponsored system.
In 2016 the ERISA Advisory Council will be examining and drafting recommendations to the Secretary on two new topics. The first will look at plan-to-plan transfers to address challenges participants face when initiating and completing the rollover of prior employer assets into a new employer plan. The second will offer the Secretary with draft materials to help plan sponsors understand, evaluate, and protect benefit plan data and assets from cybersecurity risks. Public hearings were held June 7-8 in Washington, D.C.
Committee on Benefits Finance member Deb Tully, a partner at Pine Cliff Consulting in Framingham, Massachusetts, was appointed to the ERISA Advisory Council for three-year term beginning in 2015.
For more information, contact Karen Lapsevic at 202-626-7809 or [email protected].