In the fourth quarter of 2020, agencies under the outgoing Trump administration proposed and finalized several rules that impact health & welfare and retirement plans. Upon taking office in January 2021, the Biden administration quickly moved to halt the implementation of some of these rules, and both the Biden administration and members of Congress signaled that they would seek to unwind others.
By way of an update, as of the date of this newsletter, below is the status of the following rules relating to health & welfare and retirement plans:
- The ESG Rule and Proxy Voting Rule (published
Dec. 2020).
In a May 2021 Executive Order entitled "ClimateRelated Financial Risk", President Biden directed that the Secretary of Labor consider a proposed rule that would suspend, revise, or rescind both the ESG rule (which requires that plan fiduciaries select investments solely based on financial factors, without consideration of any environmental, social, and governance factors) and the proxy voting rule (which requires that plan fiduciaries consider the financial significance of any proxy vote or exercise of stockholder rights and adopt policies and procedures regarding how such rights will be exercised). The proposed rule would be published for notice and comment by September 2021. The DOL announced in March 2021 that it would not enforce, or otherwise pursue enforcement actions against plan fiduciaries based on a failure to comply with, both the ESG rule and the proxy voting rule. - Prohibited Transaction Exemption (PTE) 2020-02
(published Dec. 2020).
In April 2021, the DOL released FAQs pertaining to PTE 2020-02, which permits certain fiduciaries providing investment advice to offer other investment advisory services. Among other guidance, the FAQs confirm that PTE 2020-02 became effective in February 2021 (subject to a nonenforcement policy through December 2021 pursuant to FAB 2018-02) and that the DOL anticipates providing further guidance regarding fiduciary investment advice, which may include amending PTE 2020-02. PTE 2020-02 is further discussed in this newsletter on page 19. - Amendments to the HIPAA Privacy Rule
(originally released Dec. 2020).
The comment period for amendments to the HIPAA Privacy Rule, which introduce significant changes to the administration and sharing of protected health information (PHI), was extended through May 6, 2021 due to "a significant amount of public interest." The final amendments have not yet been published. - The Interim Final Rule on Lifetime Income
Disclosures (published Aug. 2020).
The Interim Final Rule on Lifetime Income Disclosures, which requires defined contribution plans to provide lifetime income illustrations to participants to help them better understand their potential retirement income stream from their plan balance, remains subject to DOL review. The DOL issued Temporary Implementing FAQs on July 26, 2021, which are further discussed in this newsletter on page 22.
For additional information regarding these rules and the Biden administration's regulatory freeze, please see our Q1 2021 Newsletter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.