This document provides an overview and summary of new ERISA disclosure regulations for participant fees and service provider fees that take effect in January 2012. It discusses the requirements for disclosing plan-related information, administrative expenses, individual expenses, and investment expenses to plan participants. It also outlines the requirements for covered service providers to disclose fee and compensation information to the plan's responsible fiduciary. The presentation provides details on the timing, methods, and responsibilities for making these new disclosures under the DOL regulations.

1. Welcome to Today’s PresentationNew ERISA Disclosure Contracts Are Coming: What You Need to Know and DoIan KopelmanPartner and Chair, Employee Benefits and Executive Compensation Group, DLA Piper USA LLP Phone: (312) 368-2161Email: ian.kopelman@dlapiper.comJames Scheinberg, CIMA® AIFA®Manager Partner, North Pier Fiduciary Management, LLCPhone: (800) 403-7065Email: jim.scheinberg@npier.com

2. Information About Today’s PresentationAll attendees’ lines are muted. Ask questions by typing them in the Questions pane on the Control panel.Questions you submit are not visible to other audience members.All attendees will receive a copy of the presentation after the webinar.If you are listening in over your computer and are having difficulty hearing, dial in on your phone to the number listed in the audio pane.Today’s session is being recorded.

3. Presentation Table of ContentsRegulations, Requirements, Responsibilities and DeadlinesParticipant Disclosure Slide 4Provider Disclosure Slide 14What to Look For, What to do, Due Diligence & Negotiation TipsProvider Disclosure Slide 25Participant Disclosure Slide 37

4. PARTICIPANT FEE DISCLOSUREA COMPLIANCE GUIDE FOR PLAN SPONSORS Ian S. KopelmanDLA Piper LLP (US)May 5, 2011

5. 5Participant Fee Disclosure Rules DOL final regulations issued October 20, 2010, effective January 1, 2012 for calendar year plansCover participant-directed individual account plans regardless of compliance with ERISA Section 404(c)Compliance with the regulations will satisfy the plan administrator’s fiduciary duty to disclose plan fees to participants and Section 404(c) disclosure requirements as long as the information used is complete and accurate

6. 6Timing General rule for plan-related, administrative and individual expensesDisclosure on or before the first date a participant can direct investments and at least annually thereafterDescription of any changes at least 30 but not more than 90 days before effective date, except for unforeseeable events or circumstances beyond the plan administrator’s control then as soon as reasonably practicableTransition rule – Initial disclosures must be provided to current participants within 60 days of effective date for the planCertain information must be provided quarterly – can be included with participant statements

7. 7Fiduciary ResponsibilityDisclosure is fiduciary responsibility of plan administratorPlan administrator means The person (individual, committee or entity) specifically designated by the terms of the plan If none designated, the plan sponsor If neither of the above, a person designated by the DOLRegular and periodic disclosures to make sure that participants are Aware of their rights and responsibilities regarding investmentsProvided sufficient information regarding the plan and investments, including fees and expenses, to make informed decisions

8. 8General Plan-Related InformationExplanation of investment instruction processWhen and how to give investment instructions Any restrictions on investments or transfers between fundsAny plan provisions regarding voting, tender or similar rightsIdentification of designated investment alternatives and designated investment managers Description of any brokerage windows or similar arrangements

9. 9Administrative Expenses General Description of fees and expenses for general plan administrative services (such as legal fees) that may be separately charged against individual accountsExplanation of fees and how they are allocated Quarterly statement Dollar amount of administrative fees and expenses actually charged to participant’s account during preceding quarter Description of the services to which charges relateIf applicable, an explanation that some expenses were paid from annual operating expenses of investment alternative through revenue sharing or similar arrangements

10. 10Individual Expenses Explanation of fees and expenses charged to individual accounts and not on plan wide basis such as fees forProcessing plan loans or QDROsInvestment adviceBrokerage windows, commissions, or similar charges Quarterly statement with Dollar amount of the individual expenses that are actually charged during preceding quarter to the participant’s accountDescription of the services to which charges relate

11. 11Investment Expenses Automatic disclosures must be provided on or before first date participant can direct investments and at least annually thereafterInformation to be automatically disclosed Name, type of investment and performance data reflecting 1, 5 and 10 year annual returnsBenchmark (broad-based market index) Fees charged directly against participant’s account and description of any restrictionsTotal annual operating expenses expressed as both percentage and dollar amount

12. 12Investment ExpensesInformation to be automatically disclosedStatements regarding impact of fees and expenses on investment returns, general securities disclosures and directing participants to DOL website for more informationInvestment provider’s website Glossary of termsLimitations and fees on withdrawals, transfers or surrenderName of any annuity product with description of objectives and goals and benefits and factors that determine price of guaranteed income payments

13. 13Investment Expenses Any materials relating to exercise of voting, tender or similar rights provided after investment Copies of prospectuses, financial statements or reports, statement of the value of a share or unit and list of portfolio assets provided upon participant’s requestInvestment information must be in a comparative format, prominently display the date and includeName, address and telephone number of the plan administrator or its designeeExplanation of how to request and obtain additional information

14. 14Disclosure Methods Plan-related and administrative expense information can be disclosed in SPD or benefit statements if distribution frequency requirements are metDOL electronic disclosure rules applyRegulations provide a model disclosure for investment expense information – use not required but will be deemed to have satisfied regulations

15. 15Investments - DOL Model Disclosure Sample performance informationSample fees and expense information

16. 16Complete and Accurate Information Plan administrator is not liable for completeness and accuracy of information if it relies reasonably and in good faith on information provided by service provider or investment fund providerSeparate regulations impose disclosure requirements on plan service providers – but plan administrator is ultimately responsible for obtaining and disclosing information to participants

17. 17Service Provider Disclosures DOL interim final regulations issued July 16, 2010, delayed effective date of January 1, 2012Require covered service providers to disclose fee information to a responsible plan fiduciaryResponsible plan fiduciary – has authority to cause plan to enter into, extend or review contracts Covered service provider – provides services to plan as a fiduciary or a registered investment advisor, provides recordkeeping or brokerage services or other otherwise receives indirect compensation

18. 18Service Provider Disclosures Description of the services to be providedIf applicable, Statement that service provider will provide services as a fiduciary Statement that service provider will provide services as a registered investment advisorSeparate descriptions of direct and indirect compensation that service provider expects to receiveDirect compensation -- fees charged directly to plan or participant accountsIndirect compensation -- fees which are not charged directly to plan or participant accounts, but received from other sources, including description of services and name of payer

19. 19Service Provider Disclosures Description of compensation that will be paid among service provider and related parties, including services and names of payers and recipientsDescription of compensation that will be directly charged against the plan’s investments and reflected in the net value of the investments, including services and names of payers and recipientsIn advance of contract, description of compensation reasonably expected in connection with contract termination and how any prepaid amounts will be calculated and refunded

20. 20Service Provider Disclosures Description of how compensation will be received, whether billed to plan or deducted directly from participant accounts or investmentsCompensation may be described as formulaFor recordkeeping services Description of any direct and indirect compensation service provider, any affiliate or any subcontractor expects to receive If services are to be provided without explicit compensation or compensation is offset or rebated based on other compensation received, a reasonable and good faith estimate of the cost of such services

21. 21Service Provider Disclosures For services as fiduciary for an investment that holds plan assets description of Compensation that will be charged directly against amounts investedInvestment’s annual operating expenses if return is not fixedOngoing expenses in addition to annual operating expensesGenerally disclosure must be made reasonably in advance of date the service contract is entered into, extended or renewedChanges in required information must be disclosed as soon as practicable, but not later than 60 days after service provider is informed of change except for extraordinary circumstancesNew investments must be disclosed as soon as practicable, but not later than date of designation

22. 22Consequences of Failure to Comply If service provider fails to comply with regulations, contract is a prohibited transaction under ERISAExemption applies if responsible plan fiduciary was reasonably unaware of failure and Reasonably believed that contract satisfied regulations Did not know or have reason to know that provider would fail to comply Immediately upon discovering failure, requested in writing that provider furnish missing informationIf provider fails to do so promptly, notifies DOL of failureIf exemption requirements are met, only service provider is subject to penalties and excise taxes on prohibited transactions

23. 23Information Sources Much of the information regarding investment funds, including performance and expenses, is included in prospectus or similar disclosure documents required by securities laws Service provider contracts with service providers will typically disclose direct compensation Plan administrator may have to specifically request information regardingIndirect compensation Compensation paid among related parties

24. New ERISA Disclosure Documents are ComingWhat You Need to Know and DoNorth Pier Fiduciary Management, LLCJim Scheinberg CIMA ®, AIFA ®(800)403-7065www.npier.com

25. 408(b)(2) Service Provider Disclosures - What to look for:Recordkeeper DisclosuresAll revenueShelf space fees from fund companies (non-plan specific)Structural conflicts of interest (ownership)Recordkeeper DeclarationsAny fiduciary services

26. 408(b)(2) Service Provider Disclosures - What to look for:Advisor DisclosuresAll Compensation – Must be Disclosed12b-1, Fees & Commissions Contingent CommissionsNon-monetary CompensationCo-marketing ActivitiesResearch ArrangementsAdvisor Fiduciary DeclarationsWhat’s functions are included and what is omitted?

27. 408(b)(2) Service Provider Disclosures - What to look for:4 Major Categories of Advisor Fiduciary FunctionsInvestment Advisory3(21) consulting or 3(38) discretionary?Investment Management Models / TDFsFiduciary Processes ‘Friend of Court’ or Fiduciary?Employee Education and Advice

28. 408(b)(2) Service Provider Disclosures - What to look for:Difference Between ‘Friend of Court’Service not outlined in service agreement and is tangential to primary agreement…and Advisor/Consultant as a FiduciaryServices are delineated in a service agreement and performed as a fiduciary to the plan - held to “fiduciary” standard

29. “Choices must be made for exclusive benefit of participants and their beneficiaries.”*ERISA 404(a)(1)(A)

30. 408(b)(2) Service Provider Disclosures - What to look for:Potential consulting (one time) functions that could be provided by a FiduciaryPlan ReviewsOne-time process or investment ‘audits’Vendor SearchesFee Studies / BenchmarkingManager / Target Date SearchesFiduciary Processes Engagements

31. 408(b)(2) - Things to Do…Record Keeper DisclosuresArmed with revenue disclosures:Benchmark to compare value Callan Study: 85% calculated plan fees within the past year and 84% of those benchmarked as a result of their findings.Renegotiate/restructure fee arrangement*Callan Associates’ 2011 DC Trends Survey, Defined Contribution Trends Survey: Positioning the DC Plan for the Future

32. 408(b)(2) - Things to Do…Advisor DisclosuresArmed with disclosures:Benchmark to compare value Renegotiate/restructure fee arrangementFor omitted services – consider ADDING specialist. Preform additional due diligence – as needed

33. 408(b)(2) - Things to Do…Due DiligenceDon’t wait for your vendors & advisors to come to you. Preempt.Ask for your own disclosure formatPlan a meeting to review issuesHire outside counsel to investigate/interpret for you

34. Need Help? Different ScenariosKnowledgeable Sponsor,

35. Exhaustive Comparative Search & Aid of Third Party in Selection,

36. Regular BenchmarkingClarity and ConfidenceLong-Standing Relationship,

37. High Trust/Reliance,

38. BUT NOT SURE,

39. More than 5 years since benchmarkingAbility to Assess on OwnNewer to Fiduciary Oversight

40. Not involved when service providers engaged (inherited relationships) Not sure of valueTime To Renegotiate: Why Now?Typical pricing structures have changedAsset based fees have swelled. Consider structure change.M & A – you may be with a different organization than you hiredDifferentiation of advisor service modelsWho is doing the work?What are they doing / not doing?Competition is up Firms have gotten scale, do you benefit or do they? New technological resources

41. Tips For RenegotiatingNegotiating on price vs. RestructuringComparative Benchmarking (RFP-light) Forces competitive bidAffirms relationshipGet Help! (using a third party advocate)Broader knowledge baseYou don’t have to be the bad-guy in a good relationshipYou get some Due Diligence included

42. Participant Fee DisclosuresWhat to look for…A review of what will be disclosed:Administrative ExpensesAdministrative fees include costs for general plan services such as recordkeeping, legal and accounting. Method (per participant or asset based)Investment BenchmarkingInvestment Turnover …the percentage a fund manager turns over their portfolio holdings each year

43. Participant Fee DisclosuresPotential ChallengesMay shock participants with larger balances Sticker shock of seeing expensesMay cause drop in participationWho will choose benchmarks? Reccordkeeper may conflict with those used by advisor..Are you monitoring investment turnover?If not, perhaps you should startNot included in an investment’s expense ratio