Publications
Task Force on ERISA Fees Disclosure and Conflicts of Interest
Executive Summary
Goal of the Task Force:
Develop for companies that sponsor ERISA qualified benefit plans a process standard for testing the reasonableness of service providers' fees and controlling conflicts of interest.
In July 2008, IFLC formed the Task Force on ERISA Fees Disclosure and Conflicts of Interest. Impetus for the work of the Task Force emerged from retirement plan sponsors. Many of them expressed a need for a defined, standardized process to use in connection with a change in federal pension law that is coming in 2009.
The U.S. Department of Labor's Regulation 408(b)(2) will require "comprehensive, straight forward and helpful information concerning [a] service provider's compensation and possible conflicts of interest." In addition to imposing potentially radical changes on service providers, the Regulation heaps new burdens on retirement plan sponsors.
Among the increased burdens facing retirement plan officials is the need to prove that the costs they authorize for payment to their plans' service providers are reasonable. Some lawyers who specialize in ERISA have warned plan sponsors that the Regulation "will turn the ERISA retirement world upside down." Lacking a defined process to deal with the Regulation's new demands, the Task Force was organized with the specific charge to:
- assist in reviewing a template of mandates for plan sponsors to follow that have already been developed from an operational and legal review of the Regulation and case law;
- determine if the mandates are sufficient in their current form to guide compliance with the Regulation and make suggestions on how to improve them if they are not;
- expand the mandates to include underlying assessment guidelines for each;
- compose the mandates into a structure that will result in a process standard named the "ERISA Fees and Conflicts Standard";
- evaluate the anonymous results of independent assessments that use the mandates as the benchmark; and
- periodically meet ongoing in order to confirm that the mandates remain in step with plan sponsors' needs.
The Task Force believes that retirement plan sponsors will find safety in the ERISA Fees and Conflicts Standard as they attempt to prove to their plans' participants and regulators their compliance with the Regulation. A certification of conformity to the Standard will be available for plan sponsors in April 2009.
IFLC is uniquely qualified to facilitate the Task Force because only its members are certified against a defined fiduciary standard customized to fit their classification, which includes plan sponsors (i.e., Investment Stewards), Investment Advisors, and Investment Managers.
For more information about the Task Force and the ERISA Fees and Conflicts Standard you may click here. You may also request information by telephone at 1-866-933-IFLC.
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