LABOR DEPARTMENT RULE WILL WORSEN RETIREMENT INSECURITY

Millions of Consumers Stand to Lose Access to Professional Financial Guidance

WASHINGTON, D.C. – Millions of retirement savers will lose access to valuable professional financial guidance and protected lifetime income solutions under a new regulation issued by the U.S. Department of Labor (DOL), according to the Insured Retirement Institute (IRI).

“Based on our preliminary review, in issuing this unnecessary and redundant rule, DOL disregarded data showing how millions of lower- and middle-income consumers will be deprived of access to affordable retirement planning assistance,” said Wayne Chopus, President and CEO of IRI. “This rule is the product of a severely flawed rulemaking process and defies applicable judicial precedent and the limitations on DOL’s rulemaking authority as established by Congress.”

According to a 2017 Deloitte study, a similar DOL rule in 2016 caused 10.2 million retirement account holders who collectively held $900 million in savings to lose access to their financial professionals. A federal appeals court vacated that rule in 2018.

IRI has long supported the application of a best interest standard to firms and financial professionals who provide retirement savers with guidance or recommendations about insurance or investment products. IRI believes the vast majority of firms and financial professionals already act in the best interest of their clients and that the existing regulatory framework provides the necessary protections to maintain this standard.

The U.S. Securities and Exchange Commission’s (SEC) Regulation Best Interest (Reg BI) and the National Association of Insurance Commissioners (NAIC) best interest model regulation, adopted in 45 states and counting, provide an enhanced consumer protection framework covering more than 90 percent of the U.S. population.

“This new rule reflects DOL’s belief that these robust federal and state regulations do not effectively protect consumers, but DOL has offered no current, real-world evidence that the current regulatory framework is not working,” Chopus said. “Under this rule, consumers will pay the price in lost opportunities to plan for a secure and dignified retirement.”

IRI advised the President, the White House Office of Management and Budget (OMB), and DOL that this troublesome regulation imperils the benefits provided under measures in the SECURE Act and the SECURE 2.0 Act, two bipartisan laws to strengthen retirement security for workers and retirees enacted since 2019.

“This final rule will significantly impair consumers’ ability to fully take advantage of the intended benefits of these historic legislative achievements,” Chopus said. “Our collective goal should be to build on the progress of those laws and ensure the existing regulatory framework protecting consumers is enforced. We should not advance new regulations that will worsen retirement insecurity for our nation’s workers and retirees.”

IRI said it will support a Congressional Review Act (CRA) resolution to reject the DOL regulation. The CRA allows Congress to disapprove a regulation – meaning it would have no further force and effect – within a specified period after a rule is final. The House and Senate must each pass the measure, and the President must sign it.

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Contact: Dan Zielinski