Key Takeaways

• Legislative focus on transparency: The introduction of the EBSA Investigations Transparency Act and the Balance the Scales Act highlights Congress’s commitment to improving accountability and transparency within EBSA investigations and certain third-party agreements.
• Policy shift on investment decisions: The rescission of the Compliance Assistance Release 2022-01, a new ESG rulemaking project on the horizon, and increased availability of compliance assistance through sub-regulatory guidance support the decision-making authority granted to plan fiduciaries under ERISA.
• Budgetary challenges and efficiency concerns: The proposed budget reduction for fiscal year 2026, coupled with efficiency concerns, underscores the need for a comprehensive review of EBSA’s operations to ensure effective delivery on its mission of protecting the U.S. voluntary employee benefits system.
• Leadership goals for improvement: Vision of the current nominee to lead EBSA emphasizes regulatory clarity, efficient and even-handed enforcement, ending regulation by litigation, aiming to unleash the full creativity and potential of America’s employee benefits system.

Legislative Developments and Congressional Oversight of EBSA

Members of Congress and committees with jurisdiction over retirement plans have been actively involved, proposing new legislation aimed at enhancing accountability and transparency within EBSA. The introduction of the EBSA Investigations Transparency Act (H.R. 2869) on April 10, 2025, seeks to amend the Employee Retirement Income Security Act of 1974 (ERISA) by requiring EBSA to make annual reports to Congress on the status of its investigations. This move is expected to address concerns over the timeliness and efficiency of EBSA investigations, which can last from several months to years, often causing delays and repeated requests for documentation from plan sponsors.

In addition, Congress has expressed concerns over EBSA’s use of “common interest agreements” with plaintiff’s attorneys, which involve sharing information obtained during investigations for use in class action lawsuits against plan sponsors. While public knowledge of this practice has been limited, and the use of these agreements has not been widespread, the confidentiality concerns threaten to undermine plan sponsor confidence in sharing information during the course of EBSA investigation. The Balance the Scales Act (H.R.2958) introduced on April 17, 2025, would require EBSA to disclose such “Adverse Interest Agreements” to plan sponsors, promoting transparency and accountability.

DOL policy shifts and investment decisions

In a significant policy shift, the DOL issued Compliance Assistance Release No. 2025-01 on May 28, 2025, rescinding the 2022 Compliance Assistance Release No. 2022-01, which discouraged plan fiduciaries from offering cryptocurrency investments. This move signals DOL’s return to a more neutral stance on investment types within defined contribution plans, placing decision-making authority back in the hands of plan fiduciaries. Secretary of Labor Lori Chavez-DeRemer emphasized the importance of allowing fiduciaries, rather than bureaucrats, to make investment decisions. This approach may also pave the way for plan fiduciaries to consider the inclusion of private assets in DC plans.

Also on May 28, the DOL notified the U.S. 5th Circuit Court of Appeals that it will engage in a new rulemaking to replace the 2022 rule governing plan fiduciaries’ consideration of environmental, social, and governance factors in selecting plan investments (ESG Rule). The project will be included on the Spring Regulatory Agenda and the DOL “intends to move through the rulemaking process as expeditiously as possible.” Another example of DOL’s more neutral stance on investments and instead focus on prudent decision making in accordance with ERISA’s fiduciary duties and responsibilities.

Budgetary considerations and efficiency in EBSA

EBSA’s budget request for fiscal year 2026 has sparked differing opinions among former Assistant Secretaries of Labor. The proposed budget of $181 million, covering 640 full-time employees, is a reduction from the fiscal year 2025 budget of $191 million, which covered 687 full-time employees. While some argue that reduced staffing levels compromise EBSA’s ability to deliver on its mission, others view the budget request as reflective of current staff levels due to voluntary resignations and retirements.

Efficiency concerns have also been raised, with a notable reduction in the number of civil cases closed by EBSA, dropping from 3,000 per year between 2010 and 2013 to an estimated 800 per year between 2020 and 2023. This decline, together with reduced headcount suggests the need for a comprehensive review of EBSA’s operations. As EBSA navigates these challenges, the focus remains on enhancing efficiency, while empowering plan fiduciaries to make informed decisions based on clear regulatory guidance for the benefit of American workers’ retirement security.

DOL and EBSA compliance assistance

On June 2, 2025, the DOL announced the launch of an opinion letter program across five enforcement agencies within the DOL, including EBSA. Under the program, EBSA will issue advisory opinions and information letters designed to provide clear and practical guidance, explaining how laws apply to specific facts and circumstances presented by individuals or organizations. EBSA has historically issued this type of assistance, however volume has been low with only one or two advisory and/or opinion letters issued per year since 2014. While this sub-regulatory guidance is not legally binding, the requesting party and others may refer to the guidance for an indication of how EBSA views a particular situation providing much needed clarity for plan fiduciaries. This type of guidance can be issued more quickly than regulations and may be an effective deployment of limited EBSA resources.

Leadership goals and vision

Dan Aronowitz, the nominee for Assistant Secretary of Labor for EBSA, recently appeared before the Senate Committee on Health, Education, Labor, and Pensions (HELP). His leadership goals for the agency focus on improving enforcement of ERISA fiduciary law, promoting Employee Stock Ownership Plans (ESOPs), and ensuring fair and efficient enforcement. Aronowitz aims to provide regulatory clarity on various issues related to DC plans, including private assets, ESG, fiduciary rule application to IRA rollovers, forfeitures, and cybersecurity. He also emphasizes expanding plan coverage, including for independent contractors, ending litigation abuse, and addressing the challenges posed by artificial intelligence. The HELP Committee approved Aronowitz’s nomination by a vote of 14–9. The next step is a final confirmation vote by the full Senate, ideally before the August recess, but timing remains uncertain.

Conclusion

The recent developments within the U.S. Department of Labor’s Employee Benefits Security Administration together with legislative proposals reflect a broader effort to enhance efficiency, accountability, and transparency in the safeguarding of the voluntary employee benefits system in the U.S. With new leadership, policy shifts, and renewed compliance assistance efforts, EBSA is poised to address longstanding challenges and provide greater clarity to plan fiduciaries and to promote the establishment and sponsorship of workplace retirement plans. With a restored focus on fiduciary decision-making and addressing litigation risk, plan fiduciaries have the opportunity to leverage innovation in plan design, features and investments for the benefit of employees.