Modified Boehner Bill Heads For House Vote

October 4, 2001 ( ? The full House Education & the Workforce Committee approved the Retirement Security Act (H.R. 2269) yesterday, incorporating several new suggestions from committee members and the Department of Labor.

The bill, sponsored by Committee Chairman John Boehner (R-Ohio), would provide a limited exemption from ERISA’s prohibited transaction rules to allow retirement plan participants to receive investment advice from investment management firms.

The bill passed by a roll call vote of 29-17, largely along party lines. Four Democrats supported the bill: Representatives Carolyn McCarthy (D-New York), Susan Davis (D-California), David Wu (D-Oregon) and Rush Holt (D-New Jersey).

According to the American Benefits Council, modifications to the original bill included:

  • limiting the bill?s prohibited transaction exemption to advice given to defined contribution plans and participants
  • clarifying that fiduciary advisers be qualified to offer advice under a comprehensive statutory scheme
  • an improved “plain language” disclosure provided at the same time as the advice; and
  • a written acknowledgment by investment advisers to plan participants and plan sponsors that the advisers are indeed fiduciaries.

Alternative Advice

Representative Robert Andrews (D-New Jersey) offered a substitute bill that was defeated by a party-line roll call vote. That alternative called for:

  • a more specific disclosure schedule designed to remind beneficiaries when conflicts of interest may be occurring;
  • a requirement that advisers be accredited by a test, standard, code or regulatory structure;
  • more strict remedies for an adviser’s breach of fiduciary duty
  • employers to offer plan participants an alternative, “independent” source of advice

Those measures were designed to address concerns raised by Andrews and Representative John Tierney (D-Massachusetts) in a July hearing of the committee.

Chairman John Boehner (R-Ohio), who sponsored the legislation, argued that those provisions would drive up costs and administrative burdens – and could lead to substantial litigation.

The newly approved version of the bill will now be reported to the full House for possible consideration later this fall.