ICI Supports New Investment Advice Legislation

Washington, DC, October 7, 2003 - The Institute strongly supports legislation recently introduced by Senator Michael Enzi (R-WY) that would provide 401(k) plan participants with access to investment advice.

Background
The “Retirement Security Advice Act of 2003” (S. 1698) is virtually identical to investment advice legislation sponsored by Chairman John Boehner (R-OH) of the House Education and Workforce Committee that was incorporated in the Pension Security Act of 2003 (H.R. 1000), passed by the House of Representatives earlier this year. S. 1698 would provide a statutory exemption from ERISA’s prohibited transaction rules that would permit fiduciary advisers to provide investment advice to plan participants and beneficiaries.

In addition, the Senate Finance Committee approved pension legislation that included an alternative investment advice proposal opposed by the Institute. That proposal, incorporated in the National Employee Savings and Trust Equity Guarantee Act (NESTEG), would provide a safe harbor under the fiduciary duties of ERISA for employers that enter into arrangements for the provision of advice by third-party advice providers.

ICI Position
The Institute has long supported legislation that benefits 401(k) plan investors by combining objective investment advice with rigorous legal protection. Such legislation requires that investment advice would have to be solely in 401(k) investors' interests, and designed exclusively for their benefit. Any provider that offered investment advice to 401(k) investors would be subject to ERISA's strict fiduciary obligations—a stringent, unambiguous standard that is fully enforceable by federal regulators. Plan providers also would be required to provide full and fair disclosure to 401(k) investors.

Related Links

• Institute Urges Congress to Approve Pension Security Act, May 2003
• ICI Supports Investment Advice Legislation Passed by House Committee, March 2003
• Institute Submits Testimony to House on Retirement Security, March 2003
• ICI Urges Congress to Combine House, Senate Investment Advice Provisions, July 2002
• ICI Supports Investment Advice Provisions in Pension Legislation Passed by House, April 2002

The Institute devotes a section of this website to retirement security issues.