Concerns about increasing partisanship in traditionally bipartisan retirement policy and legislation was the theme of a conversation between Brian Graff and Preston Rutledge at the ERISA 403(b) Conference in Washington, D.C., on Oct. 2.
Graff, CEO of the American Retirement Association, and Rutledge, former EBSA Assistant Secretary and Founder of Rutledge Policy Group, wondered if replacements for recently retired Sen. Rob Portman (R-OH), and soon-to-be-retired Sen. Ben Cardin (D-MD), would appear, noting that the two worked together on seminal pieces of retirement plan legislation going back to their time as members of the House of Representatives.
Rutledge was optimistic about the Senate Health, Education, Labor, and Pensions (HELP) Committee’s ability to drive retirement policy, even though it was traditionally very partisan and got very little done in the area. He also said Republican Sen. Todd Young, (R-IN), was good with retirement issues and impressed with HELP Ranking Member Bill Cassidy, M.D. (R-LA), yet struggled to name a corresponding Democrat who could take the lead.
“Retirement is absolutely becoming more partisan—certainly with ESG,” Graff said. “There were not many substantive differences between the Trump Administration and the Biden Administration on this issue, but boy is it partisan.”
Rutledge explained that from a coverage standpoint, the SECURE Act was meant to be the carrot and mandates the stick, and that he believed retirement would remain bipartisan because it is challenging—with very few exceptions—to pass retirement legislation without it.
Graff noted and explained recent anti-ESG legislation introduced by Republicans, including the Retirement Proxy Protection Act, the No Discrimination in My Benefits Act, and the RETIRE Act.
He also mentioned The Protecting Americans’ Retirement Savings Act (PARSA), which would block private pension plans under ERISA from making new investments in companies controlled by, or based in, foreign adversaries, including China, Russia, Iran, North Korea, and Belarus.
Specifically, PARSA includes provisions that would force retirement accounts governed by ERISA, including 401(k) plans, employer-provided pensions, deferred compensation plans, and profit-sharing plans, to do the following.
1. End future investments and certain transactions with companies based in or otherwise directed or controlled by foreign adversaries (which refers to Iran, North Korea, Russia, and China.) Fiduciaries of ERISA plans could not acquire any interest in, lend money to, engage in transactions with, or transfer plan data to any foreign adversary entities. It would not require divestment of existing investments or breaching existing contracts.
2. Disclose continuing investments in such entities and sanctioned firms. Fiduciaries of ERISA plans would be required to make the following additional disclosures:
- A statement of all assets in a sanctioned entity, including the identity of the sanctioned entity and the reasoning for its being sanctioned;
- The aggregate value of, and specific investments in, any foreign adversary entity and the investment vehicle through which the plan holds such investment; and
- A statement of the reasoning for why the fiduciary continues holding such investments.
“ESG can be what’s included in an investment strategy, but also what is excluded,” Rutledge said.
“The Justice Department and the State Department can’t define which investments in foreign adversaries would be subject to something like that, so I don’t know how a plan sponsor would know how to define them,” Graff added. “China is the second largest economy in the world, and they’re saying you can’t have an allocation in it?”
- Log in to post comments