ARLINGTON, VA, (March 13, 2023) – The American Retirement Association applauds President Biden’s veto of a measure that would undermine the ability of retirement plan fiduciaries to freely consider the best interests of retirement plan participants.
The President’s veto leaves in place the Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights regulation that reasserts the basic premise of the Employee Retirement Income Security Act of 1974 (ERISA) – that the financial interests of retirement plan participants and beneficiaries are paramount and may not be subordinated to other considerations.
President Biden’s veto – the first of his Administration – was needed to quash an attempt by slim majorities in Congress to set aside under the Congressional Review Act the new regulation – one on which thousands of comments from a wide range of perspectives were submitted and considered, and which just took effect January 30, 2023. That regulation sought to resolve the “chilling effect” of a one passed in the waning days of the prior Administration that professed to support a similar objective, but was seen by many as dismissing the potential financial impact of environmental, social and governance factors on financial returns. And, in contrast with the hyperbole surrounding opposition to the regulation, it does not require consideration of ESG factors – in fact, it clearly states that the only acceptable criteria is the financial best interests of participants and beneficiaries. Further, the regulation clearly states that ESG factors may only be considered if the fiduciary to the plan determines they are relevant to such financial interests.
“ERISA has long held that the financial interests of retirement plan participants are to be the sole consideration of fiduciaries in selecting and monitoring plan investments,” notes Brian Graff, CEO of the American Retirement Association. “We enthusiastically support the language and intent of this important regulation in codifying that interpretation, and in providing plan fiduciaries the freedom they need and deserve to fulfill their important duties”.
About the American Retirement Association
The American Retirement Association, based in the Washington, D.C. area, is a non-profit professional organization established to empower retirement plan professionals who are dedicated to building a better retirement for Americans. The American Retirement Association comprises five premier retirement industry associations; the American Society of Pension Professionals & Actuaries (ASPPA), the American Society of Enrolled Actuaries (ASEA), the National Association of Plan Advisors (NAPA), the National Tax-deferred Savings Association (NTSA), and the Plan Sponsor Council of America (PSCA). For more information, visit www.usaretirement.org.
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