Congressman Slams DOL Proposal, Open to Legislative Solution
As the Department of Labor (DOL) finalizes new fiduciary regulations, members of Congress on both sides of the aisle are considering new legislation to address their concerns with DOL’s proposal.
On Sept. 30, the House Ways and Means Subcommittee on Oversight held a hearing
on the regulations’ potential impact on retirement savings. Subcommittee Chairman Peter Roskam (R-Ill.) began
by recognizing the importance of retirement savings, and emphasized that there is bipartisan support for protecting consumers.
“Saving for a secure retirement is more important than ever given all of the economic challenges our economy has faced in the last several years,” he said. “But you know what they say: The road to hell is paved with good intentions. The reality is this regulation would prevent many people from getting any investment advice at all.”
Roskam called the White House study citing $17 billion in lost investment earnings “fundamentally flawed” and said that small businesses and low and middle-income families would be hurt the most by the DOL’s regulations.
The witnesses at the hearing, including Patricia Owen, a small business owner from South Carolina, testified that the proposal as written would impede access to financial advice for employees and low-balance savers.
Damon Silvers, Director of Policy and Special Counsel at AFL-CIO, was the only witness who urged support of the DOL proposal.
“For union and non-union workers alike, IRAs are the largest and fastest growing retirement savings with rollovers from the employer-sponsored plans expecting to approach 2.5 million dollars over the next 5 years,” Silvers said. “This explains why, contrary to the testimony of the previous witnesses, protections for the movement of money from ERISA funds into IRA rollovers is essential to protecting the retirement security of working Americans.“
Other witnesses included Paul Schott Stevens, President and CEO, Investment Company Institute; Bradford Campbell, Counsel at Drinker Biddle & Reath LLP; LPL Financial Advisor Judy VanArsdale of enRich Private Wealth Management; and Kenneth Specht of New York Life Insurance Company.
During the hearing Rep. Richie Neal (D-Mass.) asked Roskam if legislation was a better alternative to the DOL’s fiduciary proposal.
“[S]ince we agree on client first, we agree on transparency, we agree on the notion of addressing the conflict of interest solution, if necessary, might we be able to work on a legislative solution?” he asked.
“Absolutely,” responded Roskam. Rep. Larson (D-Conn.) also urged his colleagues to consider working on a legislative remedy.
Roskam also mentioned concerns about separate guidelines for whether the recent state-based retirement initiatives, including state-based IRAs, are subject to ERISA. The DOL is expected to release new regulations before the end of this year to facilitate these initiatives.
The Ways and Means hearing was held as Congress keeps the DOL proposal at the forefront of legislative discussions on retirement policy. In September, 96 House Democrats signed onto a letter from Rep. Gwen Moore
(D-Wisc.), urging the DOL to work with stakeholders and revise its current proposal. The House Financial Services Committee passed Rep. Ann Wagner (R-Mo.)’s Retail Investor Protection Act
, but there is no word on whether it will be considered by the whole House.Alisa Wolking is the Director of Political Affairs at the American Retirement Association