Friday, February 26, at a White House forum hosted by Vice President Joe Biden, the U.S. Department of Labor announced two new rules designed to enhance retirement security and transparency for the millions of workers covered by 401(k), pension, and other retirement arrangements. The announcement was part of the White House Middle Class Task Force's first annual report.
During the past year, the Middle Class Task Force has focused on solutions to the challenges facing America's middle class – including retirement security and the need for high-quality jobs for middle class workers. The report details the year's work of the task force, and it includes a proposed rule on investment advice. The department also is announcing the publication of a final rule on multiemployer plan transparency.
"A secure retirement is essential to workers and the nation's economy. Along with Social Security and personal savings, secure retirement allows Americans to remain in the middle class when their working days are done. And, the money in the retirement system brings tremendous pools of investment capital, creating jobs and expanding our economy", said U.S. Deputy Secretary of Labor Seth Harris. "These rules will strengthen America's private retirement system by ensuring workers get good, objective information. When that happens, workers make the kind of decisions that are good for their families and the nation as the whole."
The first of the two rules would ensure workers receive unbiased advice about how to invest in their individual retirement accounts or 401(k) plans. If the rule is adopted, it would put in place safeguards preventing investment advisors from slanting their advice for their own financial benefit. Investment advisors also would be required to disclose their fees, and computer models used to offer advice would have to be certified as objective and unbiased. The Department of Labor estimates that 2 million workers and 13 million IRA holders would benefit from this rule and investments of $6 billion would be affected.
The second rule establishes new guidelines on the disclosure of funding and other financial information to workers participating in multiemployer retirement plans – those collectively bargained by unions and groups of employers. It will ensure transparency by guaranteeing workers can better monitor the financial condition and day-to-day operations of their retirement investments. The rule will go into effect in April 2010.
Written comments on the investment advice proposal should be addressed to the Office of Regulations and Interpretation, Employee Benefits Security Administration, Room N-5665, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, D.C. 20210, Attn: 2010 Investment Advice Proposed Rule. The public also may submit comments electronically by e-mail [email protected] or through the federal e-rulemaking portal.