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NARFE Submits Comments in Support of DOL Fiduciary Rule

FOR IMMEDIATE RELEASE Contact: Jessica Klement
July 21, 2015 jklement@narfe.org
  703-838-7760

Alexandria, VA – The National Active and Retired Federal Employees Association (NARFE) has submitted comments in support of the Department of Labor’s Conflict of Interest Rule Proposal, which updates the definition of “fiduciary investment advice” under the Employee Retirement Income Security Act (ERISA) to ensure individuals saving for retirement are protected by a “best interest standard” when receiving investment advice. The public comment period closed today (July 21).
 
“NARFE is particularly concerned that federal employees and retirees invested in low-fee Thrift Savings Plan (TSP) funds – the federal government’s version of a 401(k) for federal civilian employees and military personnel – currently are not adequately protected from bad financial advice regarding their TSP holdings,” said NARFE President Richard G. Thissen.
 
Under the current rule, the best interest standard does not apply to advice given on a one-time basis, advice regarding rollovers or any advice on investing in an Individual Retirement Account (IRA). Instead, such advice is often subject only to an extremely weak “suitability” standard, which allows financial advisers to provide recommendations that serve their own interests instead of the clients’ – the adviser may receive a better commission, but the investor may be subject to excessive costs, poor performance and even unnecessary risk.

“The lack of legal protection is having real-world implications for federal employees and retirees,” Thissen stated. “In fact, as reported by The Washington Post in August 2014, when a former federal employee (and pension expert) went undercover to seek advice regarding his TSP holdings, eight out of nine major investment firms told him to roll over his TSP funds into IRAs providing the same or similar investments as offered by the TSP for a substantially higher cost. That is the very definition of bad advice. Even though it meets a ‘suitability’ standard, it meets the needs of the adviser only, not the investor.”

To read NARFE’s full comments to the Department of Labor in support of the proposed rule, click here.

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The National Active and Retired Federal Employees Association (NARFE), one of America’s oldest and largest associations, was founded in 1921 with the mission of protecting the earned rights and benefits of America’s active and retired federal workers. The largest federal employee/retiree organization, NARFE represents the interests of nearly five million current and future federal annuitants, spouses and survivors.