ICI says 401(k) legislation would set a ‘dangerous precedent’

The Investment Company Institute blistered a House bill under consideration that would require detailed 401(k) plan fee disclosures and require plan administrators to offer a least one low-cost index fund to plan participants. “The bill fails to define clearly the vital disclosures investors need, while layering on unnecessary and potentially inaccurate information that will only confuse employers and workers,” Paul Schott Stevens, ICI’s president and chief executive, said in a statement. “The proposed legislation sets a dangerous precedent by giving Congress the job of selecting investment options for plans.” The ICI sent a letter detailing its concerns to members of the House Education and Labor Committee, which voted 29 to 17 yesterday to pass the 401(k) Fair Disclosure and Pension Security Act of 2009. The ICI stressed, however, that it supports efforts to improve the 401(k) system, the statement said. However, a market participant did not agree. “The bill is moving in the right direction for consistency and more uniformity [of disclosure],”said Pam Hess, director of retirement research at Hewitt Associates LLC, a global human-resource-consulting firm based in Lincolnshire, Ill. “It will lower costs for participants. The more knowledge that plan sponsors have helps them make better decisions as they shop around. The result will be better plans for participants.”