GOP lawmaker proposes bill to prioritize financial gains over ESG in retirement savings.
Legislation Introduced to Prioritize Financial Returns in Retirement Investments
Rep. Rick Allen (R-Ga.) has introduced a new bill that aims to change the way financial advisers invest Americans’ retirement savings. The legislation, known as the Rollback ESG To Increase Retirement Earnings (RETIRE) Act, seeks to prioritize financial returns over environmental, social, and governance (ESG) factors.
The purpose of HR 5339, the RETIRE Act, is to amend the Employee Retirement Income Security Act of 1974 and specify requirements regarding the consideration of financial and other factors.
Mr. Allen’s bill, introduced on Sept. 5, was accompanied by a press release on his website. The press release cited a Department of Labor (DOL) announcement from November 2022 that allowed retirement investors to consider ESG factors when selecting investments.
“President Biden will stop at nothing to inject his costly, rush-to-green agenda into every aspect of Americans’ lives,” Mr. Allen said in his press release introducing the legislation.
The legislation, which has been introduced to the Committee on Education and the Workforce, emphasizes that fiduciaries of retirement plans should act solely in the interest of the participants and beneficiaries.
The bill outlines several key provisions aimed at protecting the earnings of Americans and addressing the current administration’s rules on investment decisions.
“By empowering financial advisers to invest Americans’ retirement savings in risky, climate-related ESG funds, the Department of Labor (DOL) is blatantly prioritizing its radical political agenda over Americans’ hard-earned savings,” Mr. Allen expressed.
The DOL rule from 2022, known as the Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, faced criticism for restraining plans’ ability to consider ESG factors. Former Secretary of Labor Marty Walsh defended the rule, stating that it allows plan fiduciaries to consider the potential financial benefits of investing in companies committed to positive ESG actions.
The DOL rule was a response to a May 2021 executive order that aimed to protect retirement savings from climate-related financial risks. Assistant Secretary for Employee Benefits Security Lisa M. Gomez highlighted the usefulness of ESG factors in decision-making for plan investors.
Mr. Allen argues that the Biden administration’s investment rules are an overreach of government and irresponsible for struggling Americans. He believes that retirement plan sponsors should base investment decisions on financial returns.
“Under so-called ‘Bidenomics,’ Americans are struggling to afford basic necessities like gas and groceries. The last thing hardworking taxpayers need is for their retirement savings to be depleted due to political agendas,” he concluded.
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