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US CapitolSecond House Hearing to Examine Proposal that Threatens Retirement Security for Millions

WASHINGTON, D.C. – A flawed Department of Labor (DOL) proposed regulation is getting additional Congressional scrutiny today as the second committee in two months held a hearing to examine how the rule threatens the retirement security of millions of workers and retirees.

The Insured Retirement Institute (IRI) was again invited to testify about the proposal. IRI said that the DOL has hypothesized that regulatory gaps exist and are being exploited to harm retirement savers, but it has produced no evidence to support that theory.

“If bad actors are exploiting regulatory gaps to harm retirement savers, such gaps should be addressed through targeted rulemaking,” said Jason Berkowitz, Chief Legal and Regulatory Affairs Officer, in testimony to the House Health, Employment, Labor and Pensions Subcommittee of the House Education and Workforce Committee. “But a targeted approach is impossible without clear evidence of a problem. So instead, the DOL wants to completely upend the existing regulatory framework.”

Berkowitz said that IRI has long supported the application of a best interest standard to firms and financial professionals who provide guidance or recommendations about insurance or investment products to retirement savers.

IRI believes existing regulations effectively require that firms and financial professionals act in the best interest of their clients and that today’s regulatory framework—including the U.S. Securities and Exchange Commission’s Regulation Best Interest (Reg BI) and a National Association of Insurance Commissioners (NAIC) model best interest regulation adopted by 42 states—provides the necessary protections to maintain this standard.

“I am here to oppose the DOL’s proposal, which goes far beyond a best interest standard and would harm those who most need the guidance and assistance of financial professionals,” Berkowitz said.In 2016, DOL issued a similar rule that a study found caused more than 10 million retirement savers to lose access to their preferred financial professional before a federal appeals court vacated it in 2018. Recent IRI research shows that retirees who use a financial professional have more savings, less debt, and greater financial security.

“IRI and many other stakeholders have expressly and painstakingly detailed the negative impact this rule will have on consumers who will lose access to the financial professional of their choice and the protected lifetime income products and strategies that can help ensure they do not outlive retirement savings,” said Wayne Chopus, President and CEO at IRI in a blog post today.

“The value that financial professionals deliver to consumers stands to be stripped away by the DOL’s misguided, unnecessary, and redundant proposed rule,” he said.

During his testimony, Berkowitz also took issue with a DOL characterization of its proposal as a “best interest” rule.

“They have characterized the proposal as a “best interest rule,” even going so far as to assert that anyone complying with Reg BI should have no problem operating under the proposal. This is not true,” he said.

“Best interest rules adopted by the SEC and 42 states and counting are working without putting unnecessary roadblocks between consumers and the products and services they need,” Berkowitz added. “The DOL should recognize the limits of its jurisdiction and let the SEC and state insurance departments do their jobs as Congress intended. This proposal is not fixable. It is not needed. It must be withdrawn.”

IRI written testimony

IRI comments on the proposed rule

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Contact: Dan Zielinski

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