Labor Regulations Aim To Protect Retirement Funds

By Janie Amaya

The U.S. Department of Labor Employee Benefits Security Administration (EBSA) announced Monday a regulation that, starting Dec. 27, 2011, will allow employers to provide investment advice to employees in an effort to protect their retirement accounts.

EBSA Assistant Secretary Phyllis Borzi said that implementing this type of fiduciary transaction can help reduce investment mistakes made by people across the country.

“This regulation circumscribes or assists fiduciaries [trustees] so they can provide good, quality, unbiased investment advice to the participants in the 401(k) plan and to clients in the IRA market,” Borzi said.

Official fiduciaries, Borzi added, have the choice of being compensated on a level-fee basis in which the fees they receive can’t vary based on the investments they select or investments will be recommended based on computer models that are certified as unbiased by an independent expert.

Economic analysis of the regulation indicates that the cost of investment miscues are projected to be reduced by $7-18 billion annually.
 
“Given the rise in participation in 401(k)- type plans and IRA’s, the retirement security of millions of America’s workers increasingly depends on their investment decisions,” Boriz said in a statement.