Modified Boehner Bill Heads For House Vote
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.