WASHINGTON – An anticipated wave of baby boomer retirements over the next 20 years has the U.S. Labor Department worried.
On average, 10,000 baby boomers turn 65 per day.
This large number of retirees requires resources to help them choose retirement plans. A 1974 law needs to be updated and reformed in order to avoid “America’s coming retirement crisis,” experts say.
The Employee Retirement Income Security Act of 1974 sets standards of protection for individuals who establish pension and health plans in private industry. ERISA states four guidelines: plans must outline specific information like features and funding, designate responsibility for management and control of assets, provide appeals process for benefits, and give participants the ability to sue for benefits if trust is broken, according to the Department of Labor.
Phyllis C. Borzi, assistant secretary of Labor in the Employee Benefits Security Administration who oversees ERISA, said that the law needs to be updated. Qualified advice should be available for anyone planning for retirement, according to Borzi.
On Wednesday she discussed plans to release a fiduciary rule that would require brokers who sell Individual Retirement Accounts to follow standards of registered investment advisors.
Fiduciaries represent participants in a retirement plan. They are expected to act in the best interest of their client and follow all ERISA guidelines.
Borzi said tackling the retirement problem is her “number one priority.”
The agency hopes to release a retirement reform proposal in August. In 2010, a proposed fiduciary rule was met with resistance.
Requiring high standards of training could drive up broker prices, resulting in less advice for low- and middle-income individuals. Borzi said that this reform is beneficial, however.
“We are roughly in the same place as we were in 1974,” said Phyllis C. Borzi, “We need to focus like a laser beam on our clients [retirees],” Borzi said.
