ESG & ERISA: Plan sponsors and investment professionals have been waiting for final rules on the permissible use of environmental, social, and governance (“ESG”) considerations under ERISA when selecting plan investments and exercising shareholder rights with respect to plan assets. Based on the updated regulatory agenda, the DOL is planning to issue final ESG rules in December 2022.
Fiduciary Rule: Plan advisors and investment professionals have also been awaiting guidance on the DOL’s fiduciary rule re-write. The Trump era “fiduciary rule” is currently in effect and is a combination of a new and expansive definition of fiduciary advice and an exemption – PTE 2020-02 – from the prohibitions of ERISA and the Internal Revenue Code for certain conflicts of interest arising from nondiscretionary fiduciary recommendations. However, last year, the Biden administration announced that it is revisiting the definition of fiduciary investment advice and the requirements of various prohibited transaction exemptions. Based on the Agenda, we can expect a new proposed fiduciary rule in December 2022.
Form 5500: Plan sponsors and administrators have been anticipating (and requesting) updates to the Form 5500 for a number of years, but have only seen incremental changes from year to year. The latest round of changes in May 2022 applied to plan years beginning in 2022 and was limited in scope to reporting requirements for multiple employer pension plans (including pooled employer plans) on Schedules MB, SB, and R and other minor changes.
Additional changes to the Form 5500 still under consideration include reporting from defined contribution reporting groups, Schedule MEP, addressing the usability of financial information on Schedule H and Schedules of Assets, and changes to the Independent Qualified Public Accountant report trigger (by modifying the participant counting methodology). These and other changes are under consideration on a specific development schedule. Unless additional changes are released incrementally, we should not expect major changes to the Form 5500 until March 2023.