House Committee on Education and Labor
U.S. House of Representatives

WASHINGTON, D.C. – Over GOP objections, Democrats on the Health, Employment, Labor, and Pensions Subcommittee today approved a pair of partisan proposals that would impact Americans’ ability to save for retirement by making 401(k) plans more complex and costly while reducing workers’ access to individualized investment advice.

“Republicans share the goal of improving retirement savings options for workers. Unfortunately, the legislation approved today by Democrats on a party-line vote fails to achieve that goal,” said Rep. John Kline (R-MN), the panel’s top Republican. “Worse, these bills could actually harm workers with a one-two punch that makes plans more complicated and limits access to the individualized investment advice that could help workers navigate the system.”

The subcommittee considered two separate proposals that impact defined contribution retirement savings plans such as 401(k)s: H.R. 1984, the 401(k) Fair Disclosure for Retirement Security Act and H.R. 1988, the Conflicted Investment Advice Prohibition Act of 2009.

While Republicans have welcomed efforts to increase meaningful disclosure for workers saving for retirement, they warned that H.R. 1984 calls for voluminous new disclosure that could overwhelm participants without providing substantial benefit. Moreover, Republicans noted, the plan picks winners and losers in the investment industry and puts the federal government in the business of dictating what type of savings plans must be offered to workers.

Republicans have been at the forefront of efforts to provide workers with access to individualized investment advice, particularly through comprehensive reforms enacted in 2006 – the Pension Protection Act – that updated decades-old pension laws that had prevented many employers from providing this benefit to their employees. During today’s subcommittee vote, Republicans expressed serious reservations about H.R. 1988, arguing that it would drastically limit the availability of investment advice by undoing the landmark 2006 reforms and erasing protections that had existed in the law even before the Pension Protection Act.

“Today’s partisan vote was the wrong approach to solving a very real challenge for American families,” said Kline. “Republicans want to improve retirement security and strengthen 401(k) savings plans – and we want to do it in a way that protects workers from harmful unintended consequences that could drive up costs and complexity while reducing access to advice.”

NOTE: In April, Republicans proposed the Savings Recovery Act, a bill that responds to growing concerns among American families about losses in their retirement, college, and personal savings. The GOP plan will help families protect what they have and begin to rebuild what they have lost by giving the freedom and flexibility to save more and rebuild their nest eggs. More information on the House GOP’s solutions to restore Americans savings is available at GOP Leader.gov/savings.

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