What plan sponsors should do in a season of regulatory uncertainty.

Plan sponsors will need to prepare for a stretch of time this year where the guidance they rely on may be slow, shifting direction, or both. A recent PLANSPONSOR review article laid out a picture that isn’t as clear or consistent as in years past. Though regulatory changes are moving forward with new guidance on benefit oversight, the agency steering it is stretched thin in people to actually execute or educate.

The Employee Benefits Security Administration (EBSA) is operating with significantly fewer resources than it had a few years ago. It’s a smaller staff and a proposed budget cut heading into fiscal 2027. As one former official put it, there just aren’t enough people to write the guidance the industry is waiting on. The to-do list they have is long already…and it’s growing. Mental health updates, pharmacy benefit manager (PBM) oversight, fertility benefits, and transparency rules are all competing for attention, much of it focused around affordability ahead of the midterm elections.

At the same time, the rules themselves keep changing. New PBM transparency requirements would push service providers to disclose a wide range of compensation and pricing practices directly to plan fiduciaries. And on the investment side, another shift is speculated to be coming down on how fiduciaries weigh risk factors and more. It’s hard to make decisions and plans when the rules keep changing on employers.

How do plan sponsors take it from here

Regulatory uncertainty is when you open your eyes even more to your fiduciary duty. No matter when the government agency issues clear guidance or not, you are still expected to run an honest and well-documented process.

For employers and sponsors, consider this as you look at plan design this year:

• Don’t wait for clarity to act. A defensible decision made through a sound process beats no decision at all. Hesitation is hard to defend later.
• Lean into the data you’re now owed. As PBM transparency rules go into place, use the disclosures. Reviewing compensation and pricing is increasingly just basic best practice.
• Document the “why,” and the “what.” We’ve noted this one before. But knowing the why behind your decisions is going to be important. A record of how and why you decided on a design or benefit is part of your protection.

The sponsors who end up faring best will be the ones who kept a disciplined process the whole way through the chaos. 

Read more about how to prepare for the uncertainty this year.