ICI Applauds "Retirement Security Advice Act"

Washington, DC, June 26, 2000 - The Investment Company Institute (ICI), the national association of the American mutual fund industry, applauded the introduction today of the "Retirement Security Advice Act" by Rep. John Boehner (R-OH), Chairman of the House Subcommittee on Employer-Employee Relations.

"This legislation seeks to modernize the Employee Retirement Income Security Act (ERISA) to assure that retirement plan participants are able to obtain the services they need-specifically investment advice to help them manage their growing 401(k) plan investments-while continuing to assure that they and their retirement savings are fully protected," Institute President Matthew P. Fink said. Fink noted that the average 401(k) balance is now approaching $50,000.

In 1974, ERISA established broad standards that have fostered a safe, secure pension plan environment. However, substantial changes, such as the growth of defined contribution plans and a rapidly changing financial marketplace, have occurred over the last 26 years. Unfortunately, existing ERISA rules and regulations largely prohibit retirement plan participants from obtaining investment advice from their 401(k) plan service providers to help them decide how to allocate their retirement accounts.

"Changes to ERISA are necessary to assure that it continues to address adequately the needs of today's pension plan participants and delivers the most effective and sound benefits possible to them," Fink said. Most fundamentally, because participants in 401(k) plans both are responsible for deciding how to invest their retirement accounts and bear the risk of any such investment, it is imperative that they have access to the tools they need to help them make informed decisions.

Fink noted that retirement plan participants also need disclosure of all fundamental information about their retirement plans and the products in which they are able to invest in order to make informed investment decisions.

The Institute is a strong proponent of policy measures that would establish simpler and more accessible retirement plans, and this bill is a positive step. Fink said the Institute remains committed to working with Chairman Boehner and members of the committee on this and other initiatives to help assure that Americans workers have the tools they need to successfully prepare for retirement.

Fund industry representatives submitted testimony regarding ERISA issues in early March.