Key Legislative Issues

The Department of Labor delayed the effective date of the service provider fee disclosure regulations to Jan. 1, 2012. The regulations are intended to make it easier for plan fiduciaries to assess the reasonableness of the compensation paid for services and to highlight potential conflicts of interest that may affect a provider’s performance.

On July 15, 2010, the Department of Labor (“DOL”) released its final service provider fee disclosure regulations, bringing to fruition a more than two and one-half year regulatory project.

The Ways and Means Committee held its first hearing on fee disclosure on Tuesday, Oct. 30, 2007. Although there have been other hearings to date on fee disclosure, this is the first hearing in the committee that has jurisdiction over governmental 457 plans and the most extensive with a total of 15 witnesses.

A new focus on what plan sponsors charge in fees, and how they are disclosed to investors, will likely lead to what could be significant legislative and regulatory change before the end of 2007. SEC is also proposing a two-page plain-language alternative to the traditional prospectus that discloses a fund’s investment objectives, risks, strategies and costs.

The first of a planned series of House Education and Labor Committee hearings March 6 focused on greater fee disclosure, but showed little initial Congressional interest in legislative reforms beyond that.

Over the past year, Congress and government regulators have increasingly taken an interest in assessing fee disclosure issues, such as what fee information is required and how the information is disclosed.