May 5, 2010

Office of Regulations and Interpretations

Employee Benefits Security Administration

ATTN: 2010 Investment Advice Proposed Rule

Room N-5655

U.S. Department of Labor

200 Constitution Avenue NW

Washington, DC 20210

RE: 29 CFR 2550

Docket ID: EBSA-2008-0011

Document ID: EBSA-2008-0011-0053

Document Title: “Investment Advice – Participants and Beneficiaries; Proposed 

Rule”

RIN: 1210-AB35

Electronic comments submitted through the Federal eRulemaking Portal 

http://www.regulations.gov.

On behalf of the more than 100,000 bipartisan members and donors of the American 

Association of University Women (AAUW), I write to share AAUW‟s comments in 

response to the following Employee Benefits Security Administration (EBSA)

proposed rule: “Investment Advice – Participants and Beneficiaries.”

AAUW urges EBSA to adopt the proposed rule, which would implement provisions of 

the Pension Protection Act of 2006 that are designed to expand the availability of

investment advice to American workers who participate in pensions plans such as 

401(k)‟s or Individual Retirement Accounts (IRAs). Over the past several decades, 

defined-benefit retirement plan structures have increasingly given way to definedcontribution plans,1 which place increased responsibility on the part of the individual 

worker to plan for his or her retirement. The proposed rule would take a number of 

steps to ensure that workers are provided with increased accessibility to sound, 

impartial investment advice. Implementation of the proposed rule is a necessary 

component in the overall effort to achieve retirement security for the American 

workforce. 

AAUW’s Position on Women and Retirement Security

Since its founding in 1881, the American Association of University Women has been 

committed to promoting equity for all women. As part of this effort, AAUW‟s 2009-

2011 Public Policy Program advocates “strengthening retirement benefits and 

programs, including pension improvements and protecting Social Security from 

privatization.”2
In modern times, our nation‟s workers have come to rely on a three-legged stool model 

for retirement: Social Security, pensions, and savings. The Social Security system, of 

course, is more than just a retirement program; across the lifespan, it is one of the most 

successful anti-poverty programs in our nation‟s history, providing benefits to many 

children, disabled workers, surviving spouses, and retirees. Older women especially 

benefit greatly from this program, since many depend on Social Security as their 

primary source of retirement income. More than half of older women would fall into 

poverty without Social Security benefits.3

Unfortunately, this traditional model is insufficient for women because pensions and 

private savings options are often unavailable or inadequate for women and their 

work/life patterns. Women are more likely to suffer financial insecurity in their later 

years for many reasons. They earn less than men when working in the same position 

and also continue to work in job fields that pay less. Also, women do not spend as 

much time in the work force as men do, and women live longer than men on average 

and need more resources to support a longer lifespan.

Women who work full time earn on average about 77 cents for every dollar men earn.4

In addition, they only earn about 75 percent of men‟s earnings from the time they are 

45 to the time they are 64.5 The bottom line is that women can‟t save money they 

haven‟t earned. In sum, over the past 40 years, the real median earnings of women 

have fallen short by an estimated $700,000 to $2 million. Continuing pay inequity 

results in women having fewer savings and lower (if any) pension benefits, leaving 

them on an unequal footing in retirement. 

Although more women work now than ever before and in a multitude of different 

industries and occupations, they are still concentrated in certain fields. Women 

working in traditionally female industries actually make 20 to 30 percent less than 

those in nontraditional fields which also are more likely to offer retirement benefits.6

In fact, 60 percent of women still work in low-wage positions that often do not offer 

pension plans – including clerical, sales, and service jobs.7 Even Social Security, the 

bedrock of our social safety net, is not without flaws. Women still bear a 

disproportionate burden of caregiving responsibilities for families, which takes them 

out of the paid workforce throughout their lifespan to care for children and for aging 

parents.8

Pension plan reform is a critical element in improving retirement security for women. 

Among workers offered a 401(k) plan in 2004, the overall participation rate was 41 

percent for women and almost 45 percent for men.9 According to the Employee 

Benefit Research Institute, women‟s lower participation rate has to do with the 

difference in earnings between men and women.10 For example, while fewer than 20 

percent of workers earning less than $15,000 per year participate in a 401(k) plan 

when offered, almost 70 percent of workers earning $50,000 or more do so.11 Because 

men, on average, earn more than women, their overall participation rates in 401(k) 

plans are higher. However, when wages are held constant, the participation rate for 

women is generally equal to or greater than that of men.12 But, many women are in 
industries or occupations that do not even include the option of a 401(k) or other 

defined contribution plan. For example, women are more than twice as likely to work 

on a part-time basis as men.13 This part-time status is a major factor in the lower 

overall pension coverage rate for women (36 percent) when compared to men (48 

percent).14 In 2004, only 28 percent of women age 65 and older received pension 

benefits, versus 45 percent of men.15 Finally, even when women do participate, the 

median amount women‟s pension income is about half that of men.16

In short, in addition to recognizing the need to take additional steps to strengthen

Social Security, AAUW supports measures that will increase women‟s ability and 

willingness to participate in alternate forms of retirement programs such as 401(k)‟s 

and IRAs. 

Investment Advice for Participants and Beneficiaries

As of 2007, defined contribution retirement plans covered 60 million active 

participants $3 trillion in total holdings.17 Given the ever-increasing importance of 

such plans, the ability of participants to seek out and receive sound investment advice 

is critical for both workers and their families. 

Under the proposed rule, any advisers‟ fees must be disclosed to plan participants and 

such fees would remain fixed, irrespective of the plan to which a participant ultimately 

selects to contribute.18 Furthermore, such fees would no longer include commissions 

based on plan recommendations made by an adviser.19 Taken in tandem, the rules 

would remove the appearance of bias with respect to investment advice and allow plan 

participants to make a selection more firmly on the merits. In the words of Deputy 

Secretary of Labor Seth Harris, this rule would “strengthen America‟s private

retirement system by ensuring workers get good, objective information.”20

The presentation of objective information to plan participants could also be 

accomplished by use of a computer model certified as unbiased.21 A plan fiduciary –

defined as someone independent of the investment adviser or its affiliates – would be 

required to select this computer model, which would first undergo an independent 

certification process to confirm its unbiased nature.22 This layered approach would be 

further enhanced by a new requirement establishing an annual independent auditing 

process of all investment advice arrangements.

The Department of Labor estimates that adoption of the proposed rule would cover 

more than 83,000 defined contribution pension plans with approximately two million 

participants and an additional 13 million plan beneficiaries.23 Also affected would be 

16,000 investment advisory firms. In sum, the Department anticipates a net annual 

benefit of $6 billion following implementation.24

As described earlier, women are more likely to suffer financial insecurity in their later 

years for many reasons. AAUW thus believes that the proposed rules‟ emphasis on 

greater transparency, unbiased investment advice, and additional plan safeguards will 
take important steps towards providing all American workers – particularly women –

with a more solid footing in retirement.

Conclusion

The staggering economic impact of the so-called „Great Recession‟ starkly reminded 

all Americans about the urgent need to save money and plan prudently for their 

retirement from the moment they enter the workforce. AAUW believes that the 

proposed rules provide a pivotal assist in that effort, and as such strongly urge their 

implementation. 

If you have any questions, please feel free to contact me at 202-785-7720, or Adam

Zimmerman, regulatory affairs manager, at 202-728-7617. Thank you for the 

opportunity to submit comments on these important regulations. 

Sincerely,

Lisa M. Maatz

Director, Public Policy and Government Relations

 

1 U.S. Bureau of Labor Statistics (March 2009). Perspectives on Retirement Benefits. Retrieved April 29, 2010, from 

http://www.bls.gov/opub/perspectives/issue3.pdf. 

2American Association of University Women. (June 2009). 2009-11 AAUW Public Policy Program. Retrieved July 

9, 2009, from http://www.aauw.org/advocacy/issue_advocacy/principles_priorities.cfm.

3AARP (October 2007). Women and a Secure Retirement: Two Steps Forward, One Step Back. Retrieved August 

12, 2009 from

http://bulletin.aarp.org/yourmoney/retirement/articles/money_for_life_sb1.html 

4 U.S. Census Bureau and the Bureau of Labor Statistics. (September 2009). Annual Demographic Survey. 

Retrieved September 18, 2009, from http://www.census.gov/hhes/www/poverty/poverty08.html. AAUW favors 

using the Census data because they report median annual earnings in addition to weekly earnings. Annual earnings 

of full-time wage and salary workers is a standard measure of pay differentials. Economists also calculate the wage 

gap using median “usual weekly earnings” of full-time wage and salary workers. Weekly figures do not include 

bonuses and overtime pay. Because men are more likely than women to receive bonuses and work overtime, the 

gender wage gap in annual earnings is slightly wider than when measured using usual weekly earnings. Differences 

can also be measured on an hourly basis. Among workers paid on an hourly basis, women age 16 and older typically 

earn, on average, about 84 percent of men‟s earnings. Because only part of the work force is paid on an hourly basis, 

it is not usually considered a good representation of the full work force.

5 U.S. Department of Labor, Bureau of Labor Statistics. (July 2009). Highlights of Women’s Earnings in 2008. 

Retrieved August 12, 2009 from http://www.bls.gov/cps/cpswom2008.pdf 

6 Wider Opportunities for Women (2009). Women and Non-Traditional Employment. Retrieved August 14, 2009 

from http://www.wowonline.org/pdf/womennontradsheet2005.pdf

7 Older Women‟s League (2008). You Can’t A Save What You Don’t Earn. Retrieved August 14, 2009 from 

http://www.owl-national.org/Action_Alerts.html .

8 National Alliance for Caregiving and AARP. (April 2004). Caregiving in the US. Retrieved January 3, 2008, from 

http://www.caregiving.org/data/04finalreport.pdf. 

9 Employment Benefit Research Institute. (October 2005). Issue Brief No. 286, Employment-Based Retirement Plan 

Participation: Geographic Differences and Trends. Retrieved January 3, 2008, from 

http://www.ebri.org/pdf/briefspdf/EBRI_IB_10-20051.pdf. 
 

10 Employment Benefit Research Institute. (October 2005). Issue Brief No. 286, Employment-Based Retirement Plan 

Participation: Geographic Differences and Trends. Retrieved January 3, 2008, from 

http://www.ebri.org/pdf/briefspdf/EBRI_IB_10-20051.pdf.

11 Employment Benefit Research Institute. (October 2005). Issue Brief No. 286, Employment-Based Retirement Plan 

Participation: Geographic Differences and Trends. Retrieved January 3, 2008, from 

http://www.ebri.org/pdf/briefspdf/EBRI_IB_10-20051.pdf.

12 Springstead, Glenn R. and Wilson, Theresa M. (2000). Participation in Voluntary Individual Savings Accounts:

An Analysis of IRAs, 401(k)s, and the TSP. Social Security Bulletin, 63(1). Retrieved January 3, 2008, from 

http://www.ssa.gov/policy/docs/ssb/v63n1/v63n1p34.pdf. 

13 U.S. Department of Labor, Bureau of Labor Statistics. (July 2009). Highlights of Women’s Earnings in 2008. 

Retrieved August 12, 2009 from http://www.bls.gov/cps/cpswom2008.pdf 

14 Center on Budget and Policy Priorities. (2001). The Importance of Social Security to People of Color and Women. 

Retrieved January 7, 2008, from http://www.cbpp.org/7-18-01socsec2.htm. 

15 Employment Benefit Research Institute. (March 2006). Retirement Annuity and Employment-Based Pension 

Income Among Individuals Ages 50 and Over. Notes, 27(3). Retrieved January 3, 2008, from 

http://www.ebri.org/pdf/notespdf/EBRI_Notes_03-20063.pdf. 

16 Employment Benefit Research Institute. (December 2007). Income of the Elderly Population Age 65 and Over, 

2006. Notes, 28(12). Retrieved January 3, 2008, from http://www.ebri.org/pdf/notespdf/EBRI_Notes_12-20071.pdf. 

17 United States Department of Labor (February 26, 2010). Fact Sheet: Proposed Regulation to Increase Workers’ 

Access to High Quality Investment Advice. Retrieved April 29, 2010, from 

http://www.dol.gov/ebsa/newsroom/fsinvestmentadvice.html. 

18 Jennifer Saranow Schultz (Feb. 26, 2010). New Rules Aimed at Increasing Retirement Savings. Retrieved April 

30, 2010, from http://bucks.blogs.nytimes.com/2010/02/26/new-rules-aimed-at-increasing-retirement-savings/. 

19 Investment Advice – Plans and Beneficiaries, 75 Fed. Reg., 9360-9370. (March 2, 2010); 

http://bucks.blogs.nytimes.com/2010/02/26/new-rules-aimed-at-increasing-retirement-savings/

20 United States Department of Labor (Feb. 26, 2010). US Labor Department Rules to Improve Retirement Security 

Announced as Part of White House Middle Class Task Force’s Year-end Report. Retrieved April 29, 2010, from 

http://www.dol.gov/opa/media/press/ebsa/EBSA20100251.htm. 

21 United States Department of Labor (February 26, 2010). Fact Sheet: Proposed Regulation to Increase Workers’ 

Access to High Quality Investment Advice. Retrieved April 29, 2010, from 

http://www.dol.gov/ebsa/newsroom/fsinvestmentadvice.html.

22 United States Department of Labor (February 26, 2010). Fact Sheet: Proposed Regulation to Increase Workers’ 

Access to High Quality Investment Advice. Retrieved April 29, 2010, from 

http://www.dol.gov/ebsa/newsroom/fsinvestmentadvice.html.

23 Investment Advice – Plans and Beneficiaries, 75 Fed. Reg., 9360-9370. (March 2, 2010).

24 Investment Advice – Plans and Beneficiaries, 75 Fed. Reg., 9360-9370. (March 2, 2010).