As CFOs are well aware, the Department of Labor has said it plans to release a new rule on the definition of “fiduciary” as early as this fall. But if this bill passes, there’s little chance the agency will be able to do so.
Sen. Orrin Hatch (R-UT) recently introduced the Securities Annuities for Employee (SAFE) Retirement Act of 2013, which would strip the DOL of its oversight of IRA accounts and return that power to the Treasury.
And many business leaders believe the effects of this oversight change would virtually guarantee the release of the highly anticipated fiduciary rule being delayed.
The DOL has received heavy criticism about its plan to include IRA accounts in its rule to amend the definition of “fiduciary” under ERISA.
One of the greatest complaints of including IRAs in the definition of fiduciary is that advisors would lose the ability to earn commissions on these accounts.
‘Would delay, and could derail entirely’
Because the bill would return IRA oversight authority to the Treasury, that agency would be required to essentially start over on the fiduciary rule proposal, says Director of Investor Protection for the Consumer Federation of America Barbara Roper.
And this “would delay, and could derail entirely, final completion of these badly needed protections for workers and retirees,” Roper said.
Roper went on to say she “strongly supports allowing the DOL to move forward with strengthened fiduciary rules, and we believe application of those rules to IRAs is essential to protect the millions of middle-income workers who need to make every penny count in their efforts to fund a modest retirement.”
New public plan, more effective target-dates
The bill would also create a new public retirement plan where insurance firms pay benefits through annuity contracts, expand a company’s ability to offer annuities in defined contribution plans and make target-date fund disclosure more effective.