The U.S. Department of Labor announced today it is postponing the implementation of a rule allowing workers to receive retirement investment advice from financial service firms as sponsored by their employer. The department said it made the decision to postpone the final rule for 60 days so that it can review legal and policy issues stemming from more than 25 comment letters the department received regarding the rule.
The department published the final rule on Jan. 21, saying the regulation would allow “greater flexibility” for participants of 401(k) plans and individual retirement accounts to obtain investment advice.
Critics from the House Education and Labor Committee argue the law will “allow financial services firms to offer potentially conflicted investment advice on workers’ retirement accounts.” A Democratic aide for the House Education and Labor Committee told Dow Jones Newswires in January some investment funds that yield the highest fees for the advising financial firm may not yield the best returns for investors.
“We are disappointed that the Bush administration moved forward to enact a new regulation that will make it harder for workers to receive fair and honest advice when making key financial decisions about their futures,” said House Education and Labor Committee Chairman George Miller, D-Caif, in a statement on Jan 16. “(The) regulation will allow financial services companies to reap windfall profits at the expense of workers and tips the scales towards special interests by opening the door to conflicts of interest among the very consultants purporting to offer unbiased investment advice. At a time when Americans are rightly concerned over their financial future, it’s unfortunate that the Labor Department is using its time to give special interests paybacks rather than working to actually help workers.” (Parenthesis inserted)