Los Angeles partners Fred Reish and Bruce Ashton’s testimony before the Advisory Council on Employee Welfare and Pension Benefit Plans was mentioned in the Advisory Council’s official report to the Department of Labor (DOL). The Advisory Council was established under section 512 of ERISA to advise the DOL on matters related to welfare and pension benefit plans, and their report examines lifetime income in defined contribution pension plans.
The report quoted from Fred and Bruce’s written testimony concerning the fiduciary concerns around lifetime income options, which stated:
“In our experience, the greatest impediment to the continuing inclusion of retired participants in defined contribution plans, and to the introduction of new products and services into those plans, is the fear that plan sponsors have of being sued for a fiduciary breach. That fear includes: possible increased damages where retirees continue to have money in a plan; claims of fiduciary breaches where a plan sponsor changes to another recordkeeper, resulting in a loss of guaranteed benefits; and litigation about annuities provided by insurance companies if their financial condition weakens.”
The report also highlighted several of Fred’s comments given during his oral testimony, including his suggestions that the DOL should simplify its annuity safe harbor regulation and add additional safeguards, and that the QDIA safe harbor should be updated to include annuities in target date funds, balanced funds and managed accounts.