EBSA Press Release: Labor Department Finalizes Guidance On Investment Education [06/11/1996]

For more information call: (202) 219-8921
 

Millions of workers who invest money in their retirement plans may benefit from Department of Labor guidelines issued Monday that give employers clearer guidelines about investment information they can give their employees.

Interpretive Bulletin 96-1 was developed by the Labor Department in response to requests from employers about what they can tell employees without the information being considered financial advice. The guidelines could help the more than 20 million workers who invest in 401(k) retirement funds and who have to make choices about how to allocate their money among various investment options.

"Everyone wins with this program," said Secretary of Labor Robert B. Reich. "Employers and providers will learn how to avoid crossing the line between investment education and investment advice. Workers will be able to get better information about their investment choices."

Olena Berg, assistant secretary for pensions and welfare benefits, said, "Today, workers increasingly have to take responsibility for making decisions about their retirement investments. Our action is designed to allow companies to provide more information so workers can make good investment choices. At the same time, we want to be able to more clearly tell companies what they can say to workers."

In recent years, as the number of 401(k) plans has grown, employees often have to choose from among a variety of investment options offering differing risks and rewards.

A draft Interpretive Bulletin was circulated in December and received some 30 comments, all of which supported the basic concept and philosophy.

The Bulletin, published in the Federal Register today details the difference between information and advice, according to the provisions of the Employee Retirement Income Security Act (ERISA). It says that employers and service providers can provide three categories of information and material without being liable for losses arising from workers' investment decisions. They are:

• general financial and investment information which has no direct relationship to specific investment alternatives available to participants.
• materials which help participants assess the relevance of hypothetical asset allocation models to their investment situation.
• interactive material and information that allows participants to design and assess multiple asset allocation models.

More detailed information is available from the Pension and Welfare Benefits Administration, which administers federal pension law, at the U.S. Department of Labor, Washington, D.C. 20210, telephone (202-219-8671). This is not a toll-free number. The bulletin will be on the Internet after June 14 at address http://www.dol.gov/dol/pwba.