In an Oct. 1 comment letter filed with the Department of Labor, the American Retirement Association raised several concerns with the proposed Pooled Plan Provider registration requirements under the SECURE Act.
The DOL on Sept. 1 published the proposed rule in the Federal Register to establish the requirements for registering PPPs for Pooled Employer Plans (PEPs) in accordance with the Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted in December 2019. The SECURE Act provides that newly permitted PPPs can begin offering PEPs on Jan. 1, 2021, but requires such entities to register with the DOL before beginning operations. The proposed rule would also establish a new Form PR for PPPs to register.
Initial Registration
Chief among the ARA’s concern is that the proposal underestimates the time needed to comply with the registration requirements in advance of Jan. 1, 2021, starting date.
As envisioned by DOL, when combined with the Form 5500 annual reporting requirements, the proposed new Form PR, which includes an initial filing, supplemental filings and a final filing will provide to DOL timely access to information needed to fulfill its monitoring and oversight responsibilities. The information will also allow employers considering participating in PEPs, employees and other interested stakeholders to conduct due diligence on the PPPs.
While acknowledging that the most efficient approach for filing the Form PR may be to use the Form 5500 electronic filing system, the ARA has “concerns regarding when that system will be available to accommodate the Form PR and how that might impact PPPs operating on or close in time with Jan. 1, 2021.”
Moreover, the ARA conveys hope that the current DOL filing system is suitable for handling PPPs’ required ongoing filings to update information. To that end, the organization supports a functionality in the registration process to allow data to be uploaded by third parties, and flow directly from plan administration and reporting systems.
Regarding whether the definition of “beginning operations as a PPP” should exclude marketing and solicitation efforts with respect to the initial registration, the ARA says that it does not believe that all marketing activities should be treated as beginning operations. “In particular, activities related to marketing to service providers should be excluded. These solicitation activities are distinct from marketing to employers,” the letter states. Moreover, the ARA suggests that transition relief should be available to certain operations begun prior to Jan. 1, 2021, considering the apparent timeline for the availability of a Form PR.
The ARA also recommends clarifications in response to what information should be reported for the “primary compliance officer” of the PPP as part of the new Form PR. “Many service providers employ multiple compliance officers with responsibilities relating to varied federal, state, and international laws, as well as professional standards, accepted business practices, and internal standards,” the ARA explains.
As such, the organization suggests that the DOL specify the type of compliance officer best suited for this purpose. “We also suggest that in addition to compliance personnel’s phone number, this requirement include an email address dedicated to addressing concerns with a particular PEP, along with the requirement that responses be provided within a specific timeframe,” the letter states.
Supplemental Registration
The DOL’s proposal also calls for the reporting of changes in information included in the initial filing and other specified events affecting either the PPP or a plan it sponsors “that may signal financial problems or other circumstances that could potentially put the pensions of covered employees at risk.”
Here, the ARA suggests that the Form 5500 is more appropriate for disclosing reportable events to the DOL. What’s more, as with similar information required in the initial registration, the organization is concerned that the term “administrative proceedings” is overly broad. “We believe that the types of administrative proceedings subject to disclosure on the Form PR should be limited and should, at the very least, exclude routine audits or investigations or mere inquiries from governmental entities,” the ARA states.
The ARA further argues that any required disclosures regarding criminal, civil or administrative proceedings should be limited to matters which are adjudicated or closed. The organization contends that, because a settlement generally is not an admission of wrongdoing, information about settlements of any such proceedings or lawsuits should not be among the required data. “We do recognize, however, value in making PPP performance information available to employers engaged in due diligence. As such, we suggest that an alternate metric be used for this purpose,” the letter states.
Final Registration
The final registration filing requirements apply when a PPP ceases to operate all PEPs and has submitted a reportable event filing to indicate that the last PEP for which it served as the PPP has been terminated and ceased operating.
Here, the ARA contends that some of the data elements of final Form PR filings may be redundant to the final Form 5500. “On the other hand, we also recognize that if only a final Form 5500 were required, modifications and attachments might be needed, such that any efficiencies of a single final filing would be negated,” the ARA observes. The letter also notes that having to connect a PEP’s status to the Form 5500 information may provide less reliable information.
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