Arbitration
can provide many benefits to investors if implemented correctly and with much
planning. Weigh the advantages and disadvantages of taking your case to
arbitration to decide whether it is best for your claim.
Section II –
Chapter
IV
The Greatest Corporate Screw Up of All Time!
How
You Can Rip Your Employer’s Heart Out and Recover Retirement Account Losses
There once was an era where many corporations in America
As a result, the retirement plans started to
fall through and companies had to enter the lion’s den of angry shareholders,
global competition and trade deficits when the bottom line didn’t grow as fast
as these large corporations expected it would. They could no longer keep up
with the payments into the pension accounts and needed to make a change. To
hold onto their employees and keep the idea of pension accounts alive to avoid
going into bankruptcy, these companies needed to put the burden on their
employees to save for their retirement accounts. As long as this transition was
done under an ethical manner, these companies saw nothing wrong with this idea.
Today, these pension plans are now known as 401k,
SEP and IRA accounts.
In 2006, Congress passed the Pension Protection
Act (PPA), a piece of legislation that promoted the flexibility in retirement
plan programs. The PPA worked along the lines of the Employee Retirement Income
Security Act of 1974 (ERISA) to allow for employers to obtain fiduciary
protection for investments without automatic enrollment plans. With this plan,
Congress aimed to increase this plan among companies across the nation
believing that these arrangements would encourage a high potential for boosting
retirement readiness among workers in America
The Department of Labor (DOL) finalized the
rules on how fiduciary protection could still exist for amounts contributed to
the retirement plan while no investment direction was received directly from
the employees. Finally, a program was created with a number of requirements and
strict guidelines put into place about how these accounts should be set up,
including the use of a qualified default investment alternative (QDIA). In
other words, the PPA created the QDIA concept to limit fiduciary liability for
plan losses by establishing a safe harbor for selecting an investment for
participants who fail to choose their own.
This new retirement plan allowed for the
fiduciary to select a fund for amounts not directed by employees to other plan
options and be relieved from any losses that might be a direct result from the
investment.
Under the ERISA guidelines, a system of checks
and balances had to take place, especially as it pertained to diligence and
suitability. It was the responsibility of corporations to adhere to and follow
these guidelines. Otherwise, it would mean outright negligence if they didn’t
comply.
Big corporations came to the notion that they
could save time and money by delegating this work out to the major mutual fund
companies. They also believed that the mutual fund companies would not let them
down and they would keep them in compliance under the guidelines of QDIA and
the ERISA mandates.
written by Bradford Richdale
copyright Brad Richdale TM 2010 all rights reserved
