It's been a tumultuous time for everyone over the last few months. Not to rehash daily news, but the election results and subsequent policy making that's transpired since the new regime has taken office have put the 401(k) world into a confusing state where no one really knows what will or what will not actually transpire regulation-wise. I've intentionally stayed silent publicly about the whole Department of Labor (DOL) Fiduciary Rule mess because it seems like every day the narrative changes. That will continue to be my position until we have clarity.
Speaking of the DOL, the latest is that Mr. Puzder is out and a new favorite for the position has emerged, Alex Acosta. Mr. Acosta is a dean at the Law School of Florida International University and has some public policy experience as an assistant attorney general for the Civil Rights Division under President George W. Bush, is a former U.S. attorney for the Southern District of Florida and previously served on the National Labor Relations Board. Time will tell where he stands with respect to the 'Conflict of Interest' rule and when/if some version of fiduciary regulations will actually transpire.
In the meantime, something that I was very happy to see just transpired with the other giant threat to the private sector retirement system. Just yesterday, the House of Representatives (highly Republican tilted) passed TWO separate resolutions that would effectively "roll back" the regulatory Safe Harbor that was put into effect for states in the creation of public sector "mandatory" retirement plans. You can read about the resolutions here, House Passes Resolutions to Block State-Run Plans.
Not surprisingly, these two resolutions passed with consistent voting along party lines. The usual suspects of the anti-private sector-401k movement, Pelosi, Neal and Ghilarducci all had much to say about these resolutions. My favorite of all of the quotes was from Ms. Ghilarducci (who still thinks that a mandatory 3% contribution to a govt. plan is the answer.....saying this since Carter was president) is this one, “This would be a painful step backwards for the millions who are shut out from the dwindling number of employer-sponsored plans,”
I love that quote. It just shows how out of touch this person is. Employer's have free will to create or not create plans and employees have free will to choose to work for or not work for employers who don't offer a workplace retirement plan. If this system is free and open to all in this regard, how are they being shut out? Whereas, the safe harbor for state-run plans effectively a.) gives the states a competitive advantage as a sponsor over what can be gotten in the private sector as private sector plans are subject to ERISA and state plans are exempt and b.) create confusion and a prime opportunity for local governmental corruption (I know.....this never happens....).
The other part about that quote I like is just a fundamental disconnect on basic facts. She says "dwindling number of employer-sponsored plans". That is plainly incorrect. The number of employer sponsored plans in the U.S. increases daily, weekly, monthly and annually and has done so for three decades. What's dwindling are the number of traditional Defined Benefit Pension plans.....which by the way have been replaced by and large by Defined Contribution Plans because DB Plans are financially unsustainable for most employers, including.....eh hem.....by almost ALL of the states, cities and municipalities who have them!!!!
Hope this gets done and we get rid of this lopsided opportunity for the states. Sorry for the rant (not sorry).
- Jason Grantz, QPA, AIFA
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