Isakson, Alexander, Enzi Join Forces to Stop Threat to Middle-Income Americans’ Retirement

WASHINGTON – Today, U.S. Senators Johnny Isakson, R-Ga., Lamar Alexander, R-Tenn., and Mike Enzi, R-Wyo., introduced a resolution to stop the Obama administration from implementing a harmful new regulation that will have devastating effects on retirement planning by hardworking families and small businesses.

On April 6, 2016, the U.S. Department of Labor finalized a rewrite of its definition of a “fiduciary,” allegedly to protect individuals from misleading investment advice, but, in practice, the new rule will make retirement planning unaffordable for low- to middle-income Americans whose accounts are not valuable enough for advisors to take on the new legal liability created by the rule.

Isakson, Alexander and Enzi today filed a resolution of disapproval under the Congressional Review Act to reject the administration’s new so-called “Retirement Advice Gag Rule.”

“I have worked to fight the implementation of this harmful rule since it was first proposed and promised to do all I could to overturn it before it can harm Georgia families. The introduction of this resolution is the next step in the battle,” said Isakson, who is chairman of the Senate Health, Education, Labor and Pensions Subcommittee on Employment and Workplace Safety. “Like so many of this administration’s decisions, their new fiduciary rule harms the very individuals it seeks to protect and prevents those hardworking Americans who are trying to plan for retirement from having the opportunity to access retirement advice.”

“Retirement planning is going to be available only to the rich under the Labor Department’s so-called ‘fiduciary’ rule, because many financial advisors won’t risk the new legal liability except for clients with big accounts,” said Senate labor committee Chairman Lamar Alexander. “Congress needs to overturn this rule before it cripples low- and middle-income Tennesseans’ access to affordable retirement advice—and forces them to work longer and retire with less.” 

“This rule is a solution in search of a problem. Right now a kid with a paper route, a family with some savings, or a small business looking to help their employees can get retirement planning advice from an advisor without much hassle,” said Enzi, chairman of the Senate Budget Committee. “I am concerned that this new rule will cut off access for that advice unless you have more money to pay for increased fees the rule will likely cause. We already have financial literacy problems and this rule could stifle access to the good information already available, hurting the exact people that the rule is supposedly designed to serve.”

If approved, the resolution of disapproval would allow Congress to stop the Department of Labor from implementing this harmful rule, which will deny retirement advice to low- and middle-income savers, which is what happened when a similar change was adopted in the United Kingdom.

Under the Congressional Review Act, the House and Senate vote on a joint resolution of disapproval to stop, with the full force of law, a federal agency from implementing a rule or regulation or issuing a substantially similar regulation without congressional authorization. A resolution of disapproval only needs a simple majority to pass and cannot be filibustered or amended, if acted upon a 60-day window. The resolution of disapproval must also be signed by the president or Congress can overturn a veto with a two-thirds vote in both the Senate and the House.

Isakson is the lead sponsor of the resolution of disapproval, which, in addition to Alexander and Enzi, is being co-sponsored by U.S. Senators Kelly Ayotte, R-N.H., John Barrasso, R-Wyo., Roy Blunt, R-Mo., John Boozman, R-Ark., Shelley Moore Capito, R-W.Va., Bill Cassidy, R-La., Dan Coats, R-Ind., Thad Cochran, R-Miss., Mike Crapo, R-Idaho, Steve Daines, R-Mont., Joni Ernst, R-Iowa, Deb Fischer, R-Neb., Orrin Hatch, R-Utah, James Inhofe, R-Okla., Ron Johnson, R-Wis., Mark Kirk, R-Ill., James Lankford, R-Okla., Mike Lee, R-Utah, Mitch McConnell, R-Ky., Jerry Moran, R-Kan., Lisa Murkowski, R-Alaska, Rand Paul, R-Ky., David Perdue, R-Ga. Pat Roberts, R-Kan., Marco Rubio, R-Fla., Tim Scott, R-S.C., John Thune, R-S.D., Thom Tillis, R-N.C., David Vitter, R-La., and Roger Wicker, R-Miss.   

Background:

In October 2010, the Department of Labor proposed rewriting its regulatory definition of a “fiduciary,” allegedly to protect individuals from misleading investment advice. However, the administration later withdrew its rule amid widespread, bipartisan criticism that the proposal would essentially prevent lower- and middle-income investors from gaining access to the advice market and would likely result in confusion and ultimately discourage savings participation.

Despite these concerns, the Department of Labor finalized its fiduciary rule in April 2016 that fails to address many of the concerns raised over the previous rule.

The rule was made final on April 6, 2016.

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