The final rule, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, allows retirement plan fiduciaries to consider environmental, social, and governance when selecting investment options. The rule, which was finalized last November, has prompted twenty-five states to sue the Biden administration.
The lawsuit was filed on January 26, led by Utah Attorney General Sean D. Reyes and Texas Attorney General Ken Paxton. According to SHRM.org, Paxton said the rule “prioritizes woke Environmental, Social and Governance investing over protecting the retirement savings of approximately two-thirds of the U.S. population.”
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The Republican attorneys general assert that the rule conflicts with the Employee Retirement Income Security Act (ERISA), which covers approximately 2.5 million health plans, over 700 thousand retirement plans, and more than 600 thousand welfare benefit plans.
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Paxton argued that “The sheer magnitude of the assets that the 2022 Investment Duties Rule would affect – over half of the GDP of the entire United States – suggests that courts should hesitate before finding that DOL has authority to regulate in this area for nonfinancial purposes.”
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In addition to the states’ lawsuit, all Republican Senators and Democrat Joe Manchin agree the DOL rule is bad news. According to Fox News, they say it “politicizes” the retirement savings of 152 million Americans. The legislation will be introduced Wednesday, led by Republican Senator Mike Braun of Indiana, and introduced by Representative Andy Barr, a Republican from Kentucky. If the bipartisan disapproval resolution passes, Congress could kill the regulation.
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According to Fox News, Braun said, “President Biden is jeopardizing retirement savings for millions of Americans for a political agenda.”
Braun continued, “In a time when Americans’ 401(k)s have already taken such a hit due to market downturns and record high inflation, the last thing we should do is encourage fiduciaries to make decisions with a lower rate of return for purely ideological reasons. That’s why we are proud to stand up against this rule for the millions of Americans who depend on these funds for their retirement.”
Manchin said he was proud to be a part of preventing the rule from “endangering retirement incomes and protect the hard-earned savings of American families.” He encouraged both Republicans and Democrats to support the resolution.
The Democrat Senator told Fox News Digital, “At a time when our country is already facing economic uncertainty, record inflation, and increasing energy costs, it is irresponsible of the Biden Administration to jeopardize retirement savings for more than 150 million Americans for purely political purposes.”
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