Compliance February 28, 2025

ERISA Advisory Council Currently ‘On Ice’

Federal advisory committees have become targets in President Donald Trump’s efforts to downsize the federal government.

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Amid President Donald Trump’s efforts to reduce the federal bureaucracy, including the staffing cuts in the Department of Labor’s Employee Benefits Security Administration, advisory committees have also become targets, and the ERISA Advisory Council is currently “on ice,” according to sources.

According to Ali Khawar, the deputy assistant secretary of labor for EBSA under the administration of former President Joe Biden, the ERISA Advisory Council has not yet set a date for the year’s first meeting, which typically occurs in March or April.

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The Department of Labor has also not yet published reports the council presented to EBSA last year, including recommendations about lifetime income and qualified default investment alternatives. Khawar says at this point, these reports are delayed beyond a standard timeline.

Lisa Gomez, assistant secretary of labor and head of EBSA under Biden, says EBSA is currently not allowed to post these reports on the website. She adds that many of the council members have agreed to sacrifice their time to participate, but next steps are unclear.

“By now, they would have been starting to think about what their projects would be [and] how they can help not only EBSA, but also the regulated community,” Gomez says.

The U.S. Senate has yet to confirm Lori Chavez-DeRemer, Trump’s nominee for secretary of labor, or schedule a committee hearing for Daniel Aronowitz, nominated to lead EBSA.

Meanwhile, Trump signed an executive order on February 19 that requires federal agencies to submit within 30 days a list of “additional unnecessary government entities and advisory committees” to the president for termination.

However, Khawar explains that the ERISA Advisory Council is a statutory advisory council, created under Section 512 of Employee Retirement Income Security Act.

“So the administration doesn’t actually have the authority to abolish the ERISA Advisory Council,” Khawar says. “It would be surprising if the department decided to recommend legislative repeal, and it would be unfortunate as well, but that would also be a longer-term thing.”

The ERISA Advisory Council consists of 15 members appointed by the secretary of labor and is required under ERISA to advise the secretary and submit recommendations regarding the secretary’s functions. Rather than all 15 members being appointed at once, five members each year are appointed to staggered three-year terms, ensuring continuity across presidential administrations. In December 2024, the Biden administration appointed five new members who were set to begin serving on the council this year. Council members all work in the private sector and represent various constituencies involved in the health and retirement industries; they are not paid for their work on the council.

Khawar says the cost of running the council is “negligible.” The department pays for members’ flights and hotels when they have in-person meetings, and members receive a per diem to pay for meals on the days they are working. He says these costs are not going to drive budget deficits.

Especially because EBSA has a limited staff and has shrunk over the years, Khawar says the council provides significant value to the agency and is able to do work on and research into issues for which the agency may not have time and resources.

“Having the benefit of this group of 15 experts that represent insurance, financial services, the actuarial profession, the general public plan sponsors … spending a year talking to each other [and] coming up with the recommendations [and] getting testimony from witnesses creates a pretty rich body of material that we can draw on,” Khawar says.

He says eliminating the council or reducing its capacity would harm the department’s ability to “do more thoughtful rulemaking and implement more thoughtful policies.”

Over the past few years, Khawar says the council has helped EBSA provide more thorough cybersecurity guidance and played a significant role in amending Interpretive Bulletin 95-1 regarding selecting an annuity provider.

In addition to pausing the work of advisory councils, agencies across the federal government have been told to prepare “reduction in force” packages to submit to the administration by March 13. This not only would lay off an employee, but also eliminate the vacated position altogether.

Khawar says EBSA is no exception to the executive order and may need to make further cuts. He notes that about 80% of EBSA’s budget is personnel costs, and it will be difficult to identify areas to cut back an already “resource-starved” agency.

“When you think about the functions that exist across the agency, it’s very troubling to think of cuts, because you’ve got an agency that is responsible for writing the health regulations for private sector health funds, which is the way that most Americans under the age of 65 have insurance,” Khawar says. “You have an office that does all of the economic analysis to support our regulatory work. … You have an office that writes all the retirement regulations. You have people that do civil and criminal enforcement. … What of those are you going to eliminate?”

Benefits February 27, 2025

What DOL Layoffs Could Mean for the Future of EBSA

Probationary employees and the head of the agency’s division of employee ownership were recently terminated amid President Donald Trump’s efforts to reduce the federal workforce.

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With reports that probationary employees at the Department of Labor’s Employee Benefits Security Administration were laid off last week and with potentially more cuts to come, the already understaffed agency may be challenged to enforce existing regulations, finalize guidance regarding the SECURE Act 2.0 of 2022 and aid plan sponsors and retirement service providers.

The exact number of probationary employees terminated from their roles at EBSA is unknown. Hillary Abel, who was appointed as the head of the Division of Employee Ownership in July 2024, was terminated as part of the administration of President Donald Trump’s efforts to drastically downsize the federal government.

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It is also unclear whether the DOL’s ERISA Advisory Council has been affected by President Donald Trump’s recent executive order to eliminate federal advisory committees. The President ordered on February 19 that within 30 days a list of “additional unnecessary government entities and advisory committees” be submitted to the President for termination.

Lisa Gomez, the most recent EBSA head and former assistant secretary of labor, previously expressed concerns about EBSA’s limited budget and staff. In September 2024, Gomez and Timothy Hauser, deputy assistant secretary for program operations, said EBSA had a staff of 850 people, which they argued was inadequate for an agency required to look out for the interests of 150 million people participating in retirement plans, health plans and disability plans.

At the time, Gomez said if EBSA did not receive supplemental funding from the federal government, it would have to reduce its staff by 120 full-time employees across its three regional offices.

Gomez, who spoke recently with PLANSPONSOR, says when she was EBSA head, she would often call it a “scrappy agency,” as it always needed to be creative about how it used its limited funds. She argues that EBSA is not an agency with room to cut staff or funding.

She says recent staff cuts will likely cause issues for the Ask EBSA Hotline, a toll-free number plan sponsors, recordkeepers and other providers can use to ask questions of benefits advisers. Gomez says when she was in office, there were only about 100 benefits advisers nationwide. In the 2024 fiscal year, Gomez says these advisers helped recover $544 million for plans and participants from informal complaint resolutions.

“[Reduced staff] is going to result in longer wait times for people calling, longer queues for people to wait in line for an actual person to get on the phone [and] longer times to respond,” Gomez says.

At the beginning of the year, EBSA announced amendments to the Voluntary Fiduciary Correction Program, providing employers and plan administrators with more efficient ways to voluntarily correct compliance issues in retirement, health and other employee benefit plans. But Gomez says there need to be staff members at EBSA to help process these corrections, and she says these staff members are already under a lot of constraints.

“This is a program that EBSA does not have to offer … but it’s helpful,” Gomez says. “It’s going to be something where there’s more delays for people, and plans are already complaining that it takes too long to get things done.”

Gomez adds that the agency also had a project in place to review and improve Form 5500s, but it had to be put on hold due to the lack of resources and time.

While the agency was able to launch the Retirement Savings Lost and Found database just before the change in administration, Gomez says it was unable to finalize automatic portability regulations that many in the industry are anticipating. Ultimately, she says it is up to the Trump administration to decide if it wants to go forward with these projects and evaluate if staff members can devote time to them.

EBSA is also involved in investigating plans, and Gomez says during her tenure, the agency received inquiries from Congress asking why the investigations were taking so long. At the time, she says, only a portion of its staff were handling these investigations, and there was about one investor for every 13,000 plans that EBSA regulated. She says this backlog of investigations will likely continue amid more staff cuts.

In addition, more mandatory deadlines from the SECURE 2.0 continue to come up each year, and Gomez says additional guidance on the various provisions may be delayed by the lack of staff and resources.

It is possible also EBSA’s budget will be cut further, as there have been proposals from Republicans to reduce both EBSA and the DOL’s budgets. Congress faces a March 14 deadline to extend funding for the federal government in the current fiscal year to avoid a shutdown. In addition, the House Budget Resolution, passed along party lines this week, calls for some $2 trillion in federal spending cuts, in part to offset the cost of $4.5 trillion in planned tax cuts.

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