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June 21, 2001 at 08:00 PM
Agents And Insurers Applauding Return Of Pension Plan Advice Legislation
By
Washington
Agents and life insurance companies are lining up to support legislation expected to be introduced this week that would expand their ability to give investment advice to pension plan participants.
The legislation will be sponsored by Rep. John Boehner, R-Ohio, who chairs the House Committee on Education and the Work Force.
The bill is expected to be similar, if not identical, to legislation Boehner introduced last year, H.R. 4747.
The legislation would create new exemptions to the prohibited transaction rules of the Employee Income Retirement Security Act.
Under the legislation, a fiduciary advisor would be allowed to provide investment advice to an employee benefit plan or to a participant or beneficiary of the plan.
In addition, the fiduciary advisor would be allowed to receive fees or other compensation in connection with providing the advice.
The legislation contains safeguards aimed at assuring that any transactions are conducted on an arms-length basis.
Jack Dolan, a representative of the American Council of Life Insurers, Washington, says that, while the pension reforms enacted in the new tax relief act are vital to enhancing retirement security, more is needed.
Investment advice, he says, is a crucial element.
Plan participants are asking for advice, and life insurance companies and agents are well-trained in dealing with financial matters, Dolan says.
He adds that the legislation will give life insurers and agents an opportunity for increased interaction with workers.
David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors, Falls Church, Va., says the legislation is long overdue.
It takes into account changes in pensions since the enactment of ERISA, Winston says.
The reality, he says, is that more and more employees have 401(k) plans and must direct how the money is invested.
They need investment advice, but they are inadequately served due to the ERISA restrictions, Winston says.
Winston cites a recent survey that found that only 16% of 401(k) plan participants have advisory services available through their retirement plans.
Under last years H.R. 4747, the new ERISA exemption would apply only if the fiduciary advisor discloses a variety of information to the benefit plan or participant.
