ICI Supports Investment Advice Legislation Passed by House Committee

Washington, DC, March 11, 2003 - The Institute strongly supports investment advice legislation passed by the House Education and the Workforce Committee on March 6-the Pension Security Act (H.R. 1000). The Pension Security Act was introduced by Chairman John Boehner (R-OH), and resembles the pension bill passed by the House last year following the collapse of Enron.

H.R. 1000 would permit retirement plan providers to offer investment advice to plan participants regardless of whether the institution provides investment options for the plan. Any provider offering investment advice to 401(k) investors would be subject to ERISA's strict fiduciary standards, which require that the investment advice be solely in 401(k) investors' interests. H.R. 1000 would also allow employees to purchase qualified retirement planning services through salary deduction on a tax-favored basis.

H.R. 1000 would require employers to allow 401(k) plan participants to diversify out of company stock received as an employer contribution under one of two alternatives. Employers would have the option of allowing workers to sell their company stock three years after receiving it in their 401(k) plan (a rolling diversification period) or alternatively after three years of service with the employer. These provisions would be phased-in over a five-year period. H.R. 1000 would prohibit companies from requiring employees to invest any of their own contributions in company stock.

In addition, H.R. 1000 would require 401(k) plan administrators to provide a quarterly benefit statement to plan participants and beneficiaries that includes information such as the value of their assets, their right to diversify, and the importance of maintaining a well-balanced and diversified portfolio.

For More Information
The Institute devotes a section of this site to retirement security issues.