EMPLOYMENT BENEFITS: US DOL proposes Rule on Fiduciaries of Employment Benefit Plans

October 21, 2010

Washington – The US Department of Labor plans to update the rule on the definition of fiduciary, a statement from the agency said. Under the proposed rule, the broad meaning of the term would refer to a person who provides investment advice to plans for a fee or other compensation.

The new rule is expected to amend the 1975 regulation that defines fiduciary as simply the person providing investment advice under the Employee Retirement Income Security Act (ERISA).

The change would update the definition and take into account changes in the expectations of plan officials and participants, including practices of investment advice providers.

Labor officials said the new rule will help the department protect plans, participants and beneficiaries from conflicts of interests that may arise in the retirement plan services market.

The proposed rule is also designed to remedy this limitation, and protect plan officials and participants who expect unbiased advice, by giving a broader and clearer understanding of ERISA's fiduciary standards.