The Pension Security Act (H.R. 3762):
Helping Workers Preserve and Enhance Their Retirement Savings
Thousands of workers lost their retirement savings in recent collapses at Enron and WorldCom, and in 2002, President Bush called for congressional action to shield American workers against losing their life’s savings in similar corporate meltdowns. The House passed a comprehensive pension reform bill with significant bipartisan support.
A host of protections in the House-passed Pension Security Act would include:Give workers the freedom to diversify their 401(k) accounts and retirement savings.
Bar employers from forcing workers to invest any of their own retirement savings contributions in company stock.
Allow workers to receive professional investment advice about their 401(k)s and retirement investments – at employer expense, not the worker’s.
Allow workers who purchase professional investment advice to qualify for a payroll tax deduction, under a provision authored by Rep. Rob Portman (R-OH).
Allow workers to hold senior company insiders accountable when their pension savings are abused.
Give workers better information about their pension plans and rights to diversify.
The Retirement Security Advice Act (H.R. 2269):
ERISA (Employee Retirement Income Security Act of 1974) establishes general standards of fiduciary responsibility. In addition to these general fiduciary standards, ERISA and the Internal Revenue Code (Code) contain sweeping provisions that identify certain “prohibited transactions” between retirement plans and parties in interest, and then provide a series of exemptions from those sweeping prohibitions if specified conditions are met. As a result of the rigid application of the prohibited transaction rules, plan sponsors have been unable to arrange for the delivery of effective investment advice to plan participants and beneficiaries.
CLARIFIES THE ROLE OF THE EMPLOYER
H.R. 2269 clarifies that employers are not responsible for the individual advice given by professional advisers to individual participants, removing the barrier to employers contracting with advice providers and their workers.
Employers will remain responsible under ERISA fiduciary rules for the prudent selection and periodic review of any investment adviser.