Friday, February 26, 2010

U.S. Labor Department rules to improve retirement security announced as part of White House Middle Class Task Force's year-end report

The DOL announced two new rules. One rule is designed to help workers obtain unbiased advice about how to invest in their IRAs and 401(k) plans and the other establishes new guidelines on disclosures for multiemployer retirement plans:

Washington – Today, at a White House forum hosted by Vice President Joe Biden, the U.S. Department of Labor announced two new rules designed to enhance retirement security and transparency for the millions of workers covered by 401(k), pension and other retirement arrangements. The announcement was part of the White House Middle Class Task Force's year-end report, which the vice president released at this morning's event.

During the past year, the Middle Class Task Force has focused on solutions to the challenges facing America's middle class - including retirement security and the need for high-quality jobs for middle class workers. The report details the year's work of the task force, and it includes a proposed rule on investment advice. The department also is announcing the publication of a final rule on multiemployer plan transparency.

"A secure retirement is essential to workers and the nation's economy. Along with Social Security and personal savings, secure retirement allows Americans to remain in the middle class when their working days are done. And, the money in the retirement system brings tremendous pools of investment capital, creating jobs and expanding our economy," said U.S. Deputy Secretary of Labor Seth Harris. "These rules will strengthen America's private retirement system by ensuring workers get good, objective information. When that happens, workers make the kind of decisions that are good for their families and the nation as the whole."

The first of the two rules would ensure workers receive unbiased advice about how to invest in their individual retirement accounts or 401(k) plans. If the rule is adopted, it would put in place safeguards preventing investment advisors from slanting their advice for their own financial benefit. Investment advisors also would be required to disclose their fees, and computer models used to offer advice would have to be certified as objective and unbiased. The department estimates that 2 million workers and 13 million IRA holders would benefit from this rule to the tune of $6 billion.

The second rule announced today establishes new guidelines on the disclosure of funding and other financial information to workers participating in multiemployer retirement plans - those collectively bargained by unions and groups of employers. It will ensure transparency by guaranteeing workers can better monitor the financial condition and day-to-day operations of their retirement investments. The rule will go into effect in April 2010.

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