Commentary: Here we go again. The Obama administration is geared up to leave a lasting impression upon employee benefit packages. Just weeks after the Affordable Care Acts employer mandate to provide specific health care coverage or face penalties took effect, the administration is now in position to make its mark on employee retirement accounts.
The Department of Labor has put together a plan to impose new rules on the brokers who collectively manage trillions of dollars in U.S. retirement accounts. Its goal is to impose fiduciary responsibility upon retirement fund brokers, legally requiring them to act in the retirement clients best interest. This is a higher standard of care than the current rules, under which
The DOL will submit its plan to the Office of Management and Business for final administrative review in the next few days. Wall Street lobbyists have already defeated this proposal twice, having forced it to be withdrawn for the first time in 2011, and again last August.
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However, this time the Obama administration has timed the review to correspond with the opening arguments in the Tibble v. Edison case, being heard before the Supreme Court on Tuesday, February 24, which could be a landmark ruling for the corporate retirement space. The
The case is one of many filed in the battle to lower retirement savings costs, but it is the first to reach the Supreme Court. The timing is curious that the Tibble case has made it this far at the same time the Department of Labor is submitting its proposal to impose fiduciary responsibilities on brokers.
It is partially at the urging of Obama administration that the Supreme Court will rule whether an employer has a continued duty to monitor its employees retirement investments and to determine on an ongoing basis whether the plan is reasonable and in the best interests of its employees. Assuming the Justices do not dismiss the case, which is possible, it is likely they will rule in favor of the plaintiffs, thus giving a SCOTUS stamp of approval on Washingtons expanded influence and oversight over corporate retirement accounts.
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The hope is that this case will serve as a wakeup call to plan sponsors as well as create momentum for the DOLs plan to impose higher responsibilities on the brokers who sell to them. Most employers are
Brian Menickella is a co-founder and managing partner of
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