The U.S. Senate today passed a resolution by U.S. Senator Johnny Isakson, R-Ga., to stop the Obama administration from implementing a harmful new rule that will restrict access to retirement planning for hardworking families and small businesses.
After the Department of Labor released its final rule – which rewrites its definition of the word “fiduciary” – on April 6, 2016, Isakson filed a resolution of disapproval on April 18, 2016, under the Congressional Review Act, along with U.S. Senators Lamar Alexander, R-Tenn., and Mike Enzi, R-Wyo.
The Senate voted 56-41 for Isakson’s resolution of disapproval against the new Department of Labor financial retirement planning rule, which Isakson has fought since it was first introduced in April 2015.
“Today’s vote is a message from hardworking Americans and small businesses that they don’t want this administration further limiting their choices or using red tape to make their lives more expensive,” said Sen. Isakson, who is chairman of the Senate’s labor subcommittee. “I hear regularly from Georgians who are anxious about whether they’ll be able to adequately plan for a secure retirement. Families should have the freedom and opportunity to look out for their best interests and plan for their futures. This new rule harms the very individuals it seeks to protect, and I am committed to doing all that I can to overturn it before it can harm Georgia families.”
“Under this Labor Department’s so-called ‘fiduciary’ rule, retirement planning will be available only to the rich, since many financial advisors won’t be able to risk this new legal liability except for clients with big accounts,” said Sen. Alexander, chairman of the Senate Committee on Health, Education, Labor and Pensions. “The President needs to sign this legislation overturning 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.”
“We have a retirement coverage gap in America,” Sen. Enzi said. “The regulation put forward by the Obama Administration will limit the advice that individuals seeking access to retirement plans can receive, thereby increasing the size of that retirement gap. It will significantly impede the ability of low and middle income Americans to save for retirement”
This resolution would allow Congress to stop the Department of Labor from implementing this harmful rule, which will restrict access to retirement advice for low- and middle-income savers.
The U.S. Department of Labor claims the new regulation would protect individuals from misleading investment advice. 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.
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. The resolution of disapproval must also be signed by the president, or Congress can overturn the president’s veto with a two-thirds vote in both the Senate and the House.
Today’s Senate-passed measure, H.J.Res.88, previously passed the U.S. House of Representatives on April 28, 2016, and now goes to the President’s desk for signature.
Isakson is the lead sponsor of the Senate resolution of disapproval, which, in addition to Alexander and Enzi, was also 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., Bob Corker, R-Tenn., John Cornyn, R-Texas, Mike Crapo, R-Idaho, Ted Cruz, R-Texas, Steve Daines, R-Mont., Joni Ernst, R-Iowa, Deb Fischer, R-Neb., Jeff Flake, R-Ariz., Cory Gardner, R-Colo., Orrin Hatch, R-Utah, Dean Heller, R-Nev., James Inhofe, R-Okla., Ron Johnson, R-Wis., Mark Kirk, R-Ill., James Lankford, R-Okla., Mike Lee, R-Utah, John McCain, R-Ariz., Mitch McConnell, R-Ky., Jerry Moran, R-Kan., Lisa Murkowski, R-Alaska, Rand Paul, R-Ky., David Perdue, R-Ga., Pat Roberts, R-Kan., Mike Rounds, R-S.D., Marco Rubio, R-Fla., Ben Sasse, R-Neb., Tim Scott, R-S.C., John Thune, R-S.D., Thom Tillis, R-N.C., David Vitter, R-La., and Roger Wicker, R-Miss.
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.
The Department of Labor re-proposed this flawed regulation in April 2015. Despite extensive concerns from a variety of stakeholders, the rule was made final on April 6, 2016.