The Investment Company Institute yesterday urged Congress to act quickly in implementing investment advice legislation and a number of other retirement security provisions of the Pension Security Act of 2003, which the House is scheduled to consider today.
"Congress has a unique opportunity to combine objective investment advice with rigorous legal protection to benefit millions of 401(k) plan investors," said ICI President Matthew Fink of the legislation introduced by Senator John Boehner (R-Oh), chairman of the House Education and Workforce Committee.
Fink argued that investors participating in 401(k) plans need to be well informed as to the plans investment options, the level of risk and the importance of diversification. He stressed that the Pension Security Act would bolster the ability of the working class to confidently invest for retirement.
The bill would serve as an amendment to the Employee Retirement Income Security Act of 1974 (ERISA) by allowing workers who invest in 401(k) plans to obtain professional retirement investment advice.
It is designed to ensure that investment advice is solely in 401(k) investors best interest and that any provider that offers investment advice to 401(k) investors would be subject to ERISAs strict fiduciary obligations. Plan providers also would be required to provide full disclosure to 401(k) investors and will be fully enforceable by federal regulators, the ICI said.
Additionally, the House would require 401(k) plan administrators to provide a quarterly benefit statement to participants and beneficiaries listing their assets, rights and responsibilities. The House would also require employers to allow 401(k) participants to diversify out of company stock received as an employer contribution.