On July 15, 2010, the Department of Labor ("DOL") released interim final regulations ("Interim Rule") that require certain service providers to employee pension benefit plans to disclose information to assist plan fiduciaries in assessing the reasonableness of contracts or arrangements, including the reasonableness of the service providers' compensation and potential conflicts of interest that may affect the service providers' performance. The Interim Rule is aimed at aiding plan fiduciaries in discharging their duties to act prudently and solely in the interest of the plan's participants and beneficiaries and for the exclusive purpose of providing benefits and defraying reasonable expenses in administering the plan.
The Interim Rule is effective July 16, 2011, although the DOL is requesting comments during the next 45-day period. It is worth noting that the Interim Rule treats pension and welfare plans differently. The Interim Rule provides disclosure requirements with respect to pension plans, but the DOL did not provide guidance yet on contracts or arrangements relating to welfare plans. The DOL intends to provide guidance with respect to welfare plans in the future.
Under the Interim Rule, covered service providers will have to disclose various information in writing to plan fiduciaries, including a description of services as well as all direct and indirect compensation expected for the services and any compensation that the service provider expects to receive upon termination of the service contract or arrangement.
A more detailed summary of the Interim Rule will be forthcoming in a future edition of EmployNews.