A final (and lengthy) memo from Labor Secretary Tom Perez just weeks before a new administration recounts the “historic” step of instituting the 401k fiduciary rule, and makes a pitch to make sure it’s kept.
President-elect Donald Trump has said he will roll back many of the regulations now overseen by the department, and his nomination of fast-food executive Andy Puzder was largely interpreted to underscore that goal.
Perez noted that since 2009, the Employee Benefits Security Administration headed by Phyllis Borzi has recovered more than $1.7 billion affecting 696,403 plans and more than 188.7 million plan participants.
“This includes payment of health and pension benefits that were wrongly denied, recovery of losses to health and pension plans as a result of fiduciary misconduct and crimes, the restoration of accounts that participants did not know they had, and other recoveries to plans and participant accounts,” he wrote.
He then pointed to the fiduciary rule, and how it “makes sure that professionals providing retirement investment advice have to give advice that’s in the best interest of their clients and not divert their clients’ hard-earned income into their own pockets through hidden fees and conflicted advice.”
A White House Council of Economic Advisers analysis found that conflicted advice by financial advisors results in annual losses of approximately $17 billion each year for retirement savers.
He also mentioned how the department also put in place a rule that “will help more American workers save for retirement in the first place by illustrating a path forward for state-sponsored and certain municipal IRAs that conform to certain provisions.
“Approximately one-third of America’s workers don’t have access to retirement savings vehicles through their employers, so this rule will enable states to find innovate ways to make saving for a secure retirement easier for more Americans,” he added.
He then mentioned that the Department’s Fiscal Year 2017 budget request contained several “important proposals to enhance retirement security,” including support for pilots to make retirement benefits more portable and reforms to make it easier for employers to create pooled 401(k) plans by lowering costs and burdens while maintaining important consumer protections.
Finally, he concluded that “building on its budget request, the Department also spurred innovation by issuing grants to organizations to identify or develop viable programs that would make retirement benefits more portable for vulnerable populations.”