Compliance October 8, 2015

Lawmakers Want a Review of Fiduciary Rule Changes

In a letter to the DOL, members of Congress ask that changes made to the proposed fiduciary rule be submitted for review to the public before sending to OMB.
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Members of the U.S. House of Representatives have sent a letter to Secretary of Labor Thomas Perez expressing concerns over the Department of Labor’s (DOL) proposed regulation to expand the definition of fiduciary investment advice under the Employee Retirement Income Security Act (ERISA).

Led by Representatives Mike Kelly (R-Pennsylvania) and Sam Johnson (R-Texas), the lawmakers urge the DOL to make “substantial changes to address the shortcomings of the proposed rule…” They also ask that the DOL “provide stakeholders with an opportunity to review the changes before the rule advances and is submitted to the Office of Management and Budget.”

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“Any regulation to expand the definition of investment advice should enhance retirement security by increasing access to retirement savings and improving income security during retirement while also preserving investor choice and improving access to financial guidance and education,” the letter states. The lawmakers contend that the current proposal does not meet these goals.

While they say they support the creation of a best interest standard for investment advice, the members of Congress note they have “serious reservations” that the proposal will severely disrupt the availability of affordable financial education and investment advice and restrict product choice and retirement security for many Americans.

The letter asks for a written response from Perez within 15 days.

The DOL has received more than 3,000 comments about its proposal, with many commenters expressing that it would do more harm than good, especially for savers with low retirement account balances.

Administration October 8, 2015

SOA Updates Mortality Improvement Scale

SOA says the update will ensure pension plan actuaries have the most up-to-date information available.
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The Society of Actuaries (SOA) released an updated mortality improvement scale for pension plans that incorporates two additional years of Social Security mortality data that have been recently released.

The updated scale—MP-2015—reflects a trend toward somewhat smaller improvements in longevity.  The improvement scale includes Social Security Administration mortality data from 2010 and 2011.

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“The data continues to show that people are living longer, but longevity is increasing at a slower rate than previously available data indicated,” says Dale Hall, managing director of research for the Society. “The new improvement scale will ensure the pension actuarial community has the most up-to-date information available to help them accurately measure private retirement plan obligations.”

In October 2014, the Society released the RP-2014 base mortality tables and MP-2014 improvement scale, the first update to the SOA’s pension plan mortality tables in more than a decade. At that time, the SOA indicated the mortality improvement scale (used to project mortality rates) would be updated more frequently as new longevity data became available.

The SOA’s preliminary estimates suggest that updating to the MP-2015 scale might reduce a plan’s liabilities by between 0% and 2%, depending on each plan’s specific characteristics.

According to Hall, “Every plan is different, and it is important that professionals working in this field perform their own calculations on the impact to their plan. It is up to plan sponsors, working with their plan actuaries, to determine whether to incorporate MP-2015 into their plan valuations.” 

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