“The bill fails to define clearly the vital disclosures investors need, while layering on unnecessary and potentially inaccurate information that will only confuse employers and workers,” Stevens said in a released statement. “The proposed legislation also sets a dangerous precedent by giving Congress the job of selecting investment options for plans–a role that employers have performed well for decades under a strict fiduciary duty to their plans. “
The version of the bill H.R. 2989, approved by the committee would:
- The version of the bill Require 401(k) plans to disclose fees in one dollar figure taken from participants accounts in a worker’s quarterly statement;
- Require 401(k) service providers and plan administrators to disclose fees charged on 401(k) plans broken down into four categories: administrative fees, investment management fees, transaction fees, and other fees;
- Help workers understand their investment options by providing basic investment information, including information on risk, return, and investment objectives;
- Require plan administrators to offer at least one low-cost index fund to plan participants in order to receive protection against liability for participants’ investment losses;
- Require service providers to disclose financial relationships so companies that sponsor 401(k) plans can make sure there are no conflicts of interest;
- Ensure that if workers get investment advice through their jobs, that advice be based on the workers’ needs – not the financial interest of those providing the advice;
- Provide adjustments to pension funding rules to ensure plans can weather the economic crisis without being forced to choose between cutting jobs or freezing plans.
While ICI insists it supports 401(k) improvements, the Institute has sent a letter to Committee members.