GOVERNMENT NEWS: REDEFINING PENSION ADVICEBy
In July, Secretary of Labor Thomas Perez told a Senate subcommittee that he’s “open to different routes” for ensuring that pension plan advisors take into account the “best interests” of their clients when recommending investments in 401(k) plans and Individual Retirement Accounts (IRAs).
The Department of Labor (DOL) has proposed a controversial rule redefining the term “fiduciary” as it applies to investment advice provided by advisors to company pension plans. Currently, investment advisors must recommend “suitable” investments. The proposed rule upgrades this standard to “the best interests” of the client. At the hearings in July, Darlene Miller, president and CEO of Permac Industries, stated, “We are very concerned that the proposal will not achieve the department’s goals of better protecting workers and retirees, but will instead make it harder for small business employers and employees to access financial advice and to increase retirement savings.” The DOL’s four-day meeting in August resulted in the decision to move forward with the proposal, based on thousands of comment letters. Hearings in September conjured up more debate.