Helping Americans Save for Retirement

Statement

In his final State of the Union address, President Obama rightfully mentioned that many Americans are having a more difficult time saving for retirement. A GAO report released last June found that, among households age 55 and older, roughly 29 percent have no retirement savings or a defined benefit plan. What the president didn't say, however, is that his own Department of Labor (DOL) is pushing a new standard that would make it harder for low- and middle-income families to save for retirement. This week, two House committees passed a bipartisan solution I authored which will strengthen protections for retirement savers while ensuring that low- and middle-income investors continue to have access to affordable, sound retirement advice.

Current law protects those who participate in 401(k) retirement plans by requiring plan sponsors, administrators, and certain service providers to carry a fiduciary duty. This legal standard requires investment professionals to act in the best interest of plan participants by keeping expenses to a reasonable level and diversifying plan investments. The law also contains a strong set of governing rules for plan fiduciaries, designed to keep employees' investments safe. These policies have been in place since the 1970s, and both Republicans and Democrats have been open to reasonable ideas that make the rules work better for all participants.

Despite the fact members of Congress on both sides of the aisle have been open to changes to the current rule, the DOL has bypassed Congress and gone too far. Since 2010, the DOL has been working on a dramatically expanded fiduciary rule that many believe will drive up the cost of advice. After its initial release, experts warned that this new rulemaking threatened access to financial advice for men and women who have fewer resources to invest and need assistance planning for retirement. Facing bipartisan concerns in Congress, the administration withdrew the rule.

Last year, however, the DOL released an updated fiduciary rule for retirement plans, and unfortunately, it was similarly flawed. The Subcommittee on Health, Employment, Labor and Pensions, which I chair, is responsible for overseeing the department's actions and has long been concerned about this new standard. We've held numerous hearings on the issue, requested documents to detail the DOL's rulemaking process and urged the Secretary to withdraw or delay the rule to ensure it is done right. Because of the department's insistence on pushing forward, I -- along with Reps. Peter Roskam (R-IL), Richard Neal (D-MA) and John Larson (D-CT) -- worked to develop a bipartisan legislative solution to strengthen protections for retirement savers while protecting access to affordable retirement advice.

After first developing a set of legislative principles that guided our effort, we introduced two bills. The bills, the Affordable Retirement Advice Protection Act (H.R. 4293) and the Strengthening Access to Valuable Education and Retirement Support Act (H.R. 4294), will ensure advisors act in the best interest of their clients by enhancing transparency and accountability while also protecting access to affordable, quality investment advice. To further protect low- and middle-income investors, our bill requires that Congress vote to affirm the DOL's proposed rule before it can go into effect. If the DOL addresses the bipartisan concerns that have been raised, their proposed rule can still move forward.

On February 2, the House Education and Workforce Committee passed both these bills, and on February 3, the Ways and Means Committee passed H.R. 4294. Now both bills await floor consideration. I look forward to working with my colleagues on both sides of the aisle to pass this responsible alternative.

Simply put, there is no question that financial professionals should act in the best interest of their clients, but the DOL's proposal is not the way to ensure this happens. I believe that saving and investing works, and I fear the department's new rules will discourage those who need to plan most for their futures from seeking professional advice by making it too costly. American investors of all sizes deserve access to affordable advice to help plan for retirement, and the Obama administration should work with Congress to implement a reasonable new standard.

Feel free to contact my office if I can be of assistance to you or your family.

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