DALBAR's View on Far Reaching Impact of Pension Reform.BOSTON -- The 2006 Pension Protection Act is likely to stimulate enormous growth of the defined contribution plans Defined contribution plan A pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan that will undoubtedly affect every area in financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . The pressures put on defined benefit plans Defined benefit plan A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan by this Act and easing of restrictions on 401(k) and other DC plans will accelerate the transition to DC. Automatic processes will remove hurdles to growth that have existed for plan sponsors and participants by replacing the "manual" methods of the past. (See http://advicealert.dalbar.com.) Equally important, a new class of financial professional, the fiduciary fiduciary (fĭd  `shēĕ'rē), in law, a person who is obliged to discharge faithfully a responsibility of trust toward another. adviser, has been created. The fiduciary advised is engaged by
the employer after a vetting vet 1 Informaln. A veterinarian. v. vet·ted, vet·ting, vets v.tr. 1. To subject to veterinary evaluation, examination, medication, or surgery. 2. process that is repeated annually. This fiduciary adviser is compensated for advising employees and is in a position to meet the wide-ranging financial needs of millions of employees. DALBAR's advisor certification program, protected by an SEC No Action Letter, provides advisors and plan sponsors with the prudent due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. for engagement of fiduciary advisers under the Act. The certification process consists of a background check, disclosure of client experience and a test of defined contribution knowledge. Details of certification are available for independent advisors and for advisory firms at http://advicealert.dalbar.com. These and other details of the 2006 Pension Protection Act are presented in the report available online at http://advicealert.dalbar.com. Celebrating its 30th anniversary in 2006, DALBAR, Inc. is committed to raising the standards of excellence in the financial-services industry. Headquartered in Boston, with additional offices in Toronto, DALBAR develops standards for, and provides research, ratings, and rankings of intangible factors to the mutual fund, broker/dealer, discount brokerage A discount brokerage is a business that charges clients significantly lower fees than traditional brokerages, typically offering comparatively fewer services and/or advice. , life insurance, and banking industries. They include investor behavior, customer satisfaction, service quality, communications, Internet services, and financial-professional ratings. |
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