Retirement Planning Help More Likely For Workers
Senate's Pension Bill Would Allow 401(k) Sponsors to Provide Investment Advice to Plan Participants
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Lee Allen
Vice President of Communications and Marketing
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August 4, 2006 – The National Association of Insurance and Financial Advisors (NAIFA) commended the U.S. Senate for following the House of Representatives in passing pension legislation today that would dramatically improve the chances that much-needed investment advice for participants of employer-sponsored 401(k) retirement plans will be made available.
A NAIFA-backed provision in H.R. 5970 would allow companies that sponsor 401(k) plans on behalf of employers to make advice available to the employees participating in the plans. Under the provision, 401(k) providers could assist workers in investment decisions by allowing their agents to meet with plan participants face to face or by providing an approved computer software program. Currently, the Employee Retirement Income Security Act’s (ERISA) prohibited transaction rules make it difficult for plan providers and their agents to provide that advice.
“The action taken by the Senate today and the House last week is a giant step in the right direction,” said David F. Woods, CLU,ChFC, LUTCF, NAIFA chief executive officer. “Studies show us that there are as many as 20 million workers with 401(k) accounts who don’t get the advice they need to make informed investment decisions about their retirements. And they need help because the choices aren’t easy. Changes were needed in ERISA to pave the way for Americans to get much-needed advice from those in the best position to offer it.”
NAIFA offered a special commendation to House Majority Leader John Boehner (R-OH), for his long-standing work in drafting pension reform legislation to include the investment advice provision. The original language was included in H.R. 2830—passed by the U.S. House of Representatives last December—before the revised pension bill was reintroduced and passed by the House last week. The bill now goes to President Bush who has indicated he will sign the bill into law.
About NAIFA: Founded in 1890 as the National Association of Life Underwriters, the National Association of Insurance and Financial Advisors comprises 800 state and local associations representing the business interests of 225,000 members and their employees nationwide. Members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA's mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members. NAIFA's website can be accessed at www.naifa.org.