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ACTION REQUESTED
[19581]
January 6, 2006
TO: PENSION COMMITTEE No. 2-06
PENSION OPERATIONS ADVISORY COMMITTEE No. 2-06
RE: DRAFT LETTER TO DOL ON PROHIBITED TRANSACTION EXEMPTION
PROCEDURE REFORM
Attached for your review is a draft Institute letter to the Department of Labor (DOL)
regarding reform of DOL’s procedures for granting individual and class exemptions from
ERISA’s prohibited transaction rules.1
The letter supports reform of the prohibited transaction exemption process and makes
specific suggestions for improvement. In particular, the letter suggests that DOL:
• increase the number of class exemption granted based on previously issued
individual exemptions and make available regular updates on its application
backlog;
• reflect in the procedures that no exemption will be granted unless the conduct is
prohibited by ERISA and that exemption notices must specify the reason relief is
needed;
• give greater consideration to the benefits of a proposed exemption for participants
and beneficiaries;
• develop feasible conditions for an exemption that are consistent with other
governing laws and regulations;
• simplify the notice to interested parties by allowing dissemination of a short
summary in lieu of the Federal Register notice and permitting electronic disclosure
to participants and beneficiaries; and
• eliminate the requirement to list all prior applications.
The Senate and House pension reform bills currently awaiting reconciliation in
conference both contain prohibited transaction reform, but none of the provisions would
directly affect the procedures DOL uses to grant individual or class exemptions.2
1 DOL’s current regulatory agenda includes a review of the procedures under the Regulatory Flexibility Act. See 70
Fed. Reg. 64896, 64911 (October 31, 2005).
2 See Memorandum to Pension Members No. 57-05 [19490], dated December 21, 2005.
2
Please provide any comments that you may have on the draft letter to me at 202 326-
5810 or mhadley@ici.org by January 17, 2005.
Michael L. Hadley
Assistant Counsel
Attachment (in .pdf format)