Labor Department Testifies on Legislation to Expand Access to Investment Advice

Archived News Release — Caution: Information may be out of date.

Washington, DC - Ann L. Combs, Assistant Secretary of Labor for the Pension and Welfare Benefits Administration (PWBA), today testified before the House Committee on Education and the Workforce in support of the Retirement Security Act of 2001 to give plan participants greater access to investment advice.

The legislation (H.R. 2269) would give plan participants access to “fiduciary advisers regulated by state or federal laws and provide disclosure to participants about fees, limits on the scope of advice given and any conflicts of interest.

Combs said, “The framers of federal pension law could not anticipate the coming revolution for the pension universe or the financial marketplace. Today, an estimated 43 million workers are covered by a defined contribution plan, with most covered by 401(k) plans.

“Participants increasingly must make investment decisions that will affect their financial security and living standard at retirement. Participants need personal, tailored investment advice. The department believes that the legislation expands access to investment advice for participants while allaying the concerns of employers arising from that investment advise.”

In her testimony, Combs focused on participants’ need for investment advice and the need to address employer concerns over providing advice. Many employers are concerned about assuming fiduciary liability, including the fear that they would become responsible for monitoring all recommendations made to participants. She recommended a statutory amendment to define the scope of fiduciary liability for employers in order to ensure that the bill protects participants.

In conclusion, she commended the committee for addressing the issue and voiced full support for the bill as a means to provide certainty for the plan community while expanding the investment advice needed by 401(k) participants. A copy of the full testimony is available on PWBA’s Web site.

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Archived News Release — Caution: Information may be out of date.