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EBSA News Release: [09/26/2006]
Contact Name: Peter
Hong or Gloria Della
Phone Number: (202) 693-4676 or x8664
Release
Number: 06-1676-NAT
U.S. Secretary of Labor Elaine L. Chao Announces
Proposed Rule
on Default Investment Alternatives for Participant-Directed
Plans
First Pension Law Regulation Would Boost 401(k)s
WASHINGTON — U.S. Secretary of Labor Elaine L.
Chao today announced a proposed rule to make it easier for fiduciaries of
401(k) plans and other participant-directed defined-contribution plans to adopt
automatic enrollment design features. The proposed rule is the first major
regulation resulting from the Pension Protection Act signed into law by
President Bush on Aug. 17, 2006.
"Too many workers, some overwhelmed by investment choices or paperwork,
are leaving retirement money on the table by not signing up for their
employers' defined contribution plan," said Secretary Chao. "This regulation
would boost retirement savings by establishing default investments for these
workers that are appropriate for long-term savings."
The proposal implements provisions of the Pension Protection Act of 2006
to provide relief to plan fiduciaries who invest the assets of participants in
"qualified default investment alternatives" in the absence of participant
investment direction. Upon adoption, the rule will remove a major impediment to
automatic enrollment programs created by employers. Default investment
alternatives under the proposed regulation are intended to encourage the
investment of employee assets in appropriate investment vehicles for long-term
retirement savings.
"The new default options will help workers accumulate larger nest eggs
for retirement," said Assistant Secretary of Labor Ann L. Combs. "Workers who
don't feel equipped to make investment decisions will be automatically invested
in a mix of stocks and bonds appropriate for long term savings."
A fact sheet detailing the proposed rule can be found at
www.dol.gov/ebsa.
Public comments on the proposed rule should be submitted to the U.S.
Department of Labor, Employee Benefits Security Administration, Room N-5669,
200 Constitution Ave., N.W., Washington, D.C. 20210, Attention: Default
Investment Regulation; or electronically to e-ORI@dol.gov or
www.regulations.gov.
The proposed regulation is to be published in the Sept. 27, 2006 Federal
Register.
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