PLANSPONSOR - December/January 2021 - 39

INSIDE ANGLE
What to Expect
The DOL under a Biden administration
I
t has been a consequential four years for
retirement policy. Under the Trump administration,
the Department of Labor (DOL)
" ... the
DOL could
has maintained a very active regulatory agenda.
Over the past year alone, the agency issued a
series of proposed rules, final rules and other
guidance covering a range of areas. These
are: 1) final rules making for a more straightforward
electronic disclosure of notices and
disclosure; 2) a field assistance bulletin (FAB)
describing how plan sponsors could consider
including private equity investments in defined
contribution (DC) plans; 3) final rules regulating
proxy voting; 4) the " financial factors
rule " that further articulates the Employee
Retirement Income Security Act (ERISA)'s
duty of loyalty; 4) proposed lifetime income disclosures;
5) a request for information (RFI) surrounding pooled
employer plans (PEPs) and final rules surrounding Form PR; and
6) a proposed exemption on the provision of investment advice.
Now, with the incoming Biden administration set to take
conceivably
seek to
articulate a
more ESGfriendly
position
through subregulatory
guidance
... "
investments. Like past Democratic administrations,
Biden's is expected to favor a more
permissive approach regarding the consideration
of ESG factors in plan investments.
Thus, while it will need to rely on the notice
and comment process to affect change with
the financial factors rule itself, the DOL
could conceivably seek to articulate a more
ESG-friendly position through sub-regulatory
guidance such as interpretive bulletins (IBs).
This could come in the form of guidance that
describes the types of factors that would be
permissible as pecuniary factors.
Notably, some ongoing projects are arguably
nonpartisan and may be areas where
the proverbial baton may be handed to the
incoming administration. Specifically, it is
the reins, the regulated community may be curious as to what
to expect on a policy front. As is the case in every presidential
transition, there is no question that the incoming administration
will seek to reshape the DOL's regulatory agenda to align with its
policy positions. The only question is: How and to what degree?
Just as the Trump administration did when it took power
in early 2017, the Biden administration will likely pause and
reassess DOL regulatory projects in progress but not yet
completed. It will likely also put a hold on completed regulatory
projects that are final but not effective. Thus, the DOL's
proposed prohibited transaction exemption (PTE) on investment
advice is likely to fall within the regulatory projects that
the Biden team reassesses after the inauguration.
Pausing and unwinding rulemaking may be impossible
with respect to final regulations that are effective or will be
effective by Inauguration Day, such as the recently finalized
financial factors rule. As readers of our August/September
column, " DOL Doubles Down, " will know, the DOL's financial
factors rule was issued, in large part, in reaction to the
Trump administration's views on environmental, social and
governance (ESG) investing and the use of ESG factors in plan
widely expected that, under the Biden administration, the DOL
will continue its longstanding efforts to issue guidance in this
area, as well. In addition, the DOL will likely also continue its
efforts to prepare guidance articulating fiduciary standards
with respect to cybersecurity protocols and considerations.
On the enforcement front, it is difficult to envision the
Biden administration continuing the Trump administration's
enforcement efforts concerning ESG investing. Thus, we expect
that the recent uptick in the DOL asking sponsors about ESG
investments will likely fade sometime after the transition period.
On the other hand, under Biden, the DOL will most certainly
continue its missing participant investigation efforts. Thus, plan
sponsors can likely expect to receive many similar inquiries and be
subject to longstanding investigations that have become commonplace
under both the Obama and Trump administrations.
We also expect the Biden administration to place additional
enforcement on plan sponsor and service provider cybersecurity
practices. Given the rash of recent cybersecurity incidents
affecting participant accounts, and lawsuits filed against
plan sponsors and service providers, it is likely the DOL will
increase its enforcement activity in this area.
Steve Saxon is a partner with Groom Law Group, Chartered,
and George Sepsakos is a principal with Groom. Offices for
Groom are in Washington, D.C.
PLANSPONSOR.COM December 2020- January 2021 39
http://www.PLANSPONSOR.COM
PLANSPONSOR - December/January 2021

Table of Contents for the Digital Edition of PLANSPONSOR - December/January 2021
