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Retirement Funds of Millions of Americans in ‘Jeopardy’ as ESG Rule Weakens Protections
News Analysis
The Biden administration and Congress are currently caught up in a tug-of-war over a new Labor Department rule regarding whether Americans’ retirement savings should be used to finance a climate and social justice agenda.
The conflict goes well beyond obscure investment rules and administrative procedures and is likely to affect the financial security of many Americans in their retirement years.
News Analysis
The Biden administration and Congress are currently caught up in a tug-of-war over a new Labor Department rule regarding whether Americans’ retirement savings should be used to finance a climate and social justice agenda.
The conflict goes well beyond obscure investment rules and administrative procedures and is likely to affect the financial security of many Americans in their retirement years.
The controversy heated up last week with the Republican-controlled House approving a measure on a 216–204 vote to block the Biden administration’s new rule that permits the inclusion of climate change and social justice principles as pension investment criteria; Rep. Jared Golden (D-Maine) was the sole Democrat to support the measure. Senate Republicans passed a similar measure 50 to 46, with the support of Democrats Jon Tester (D-Mont.) and Joe Manchin (D-W.Va.), who both face reelection in Republican-leaning states in 2024.
The rule was challenged under the Congressional Review Act, which is a congressional oversight mechanism that can overturn rulings by federal agencies. Biden has threatened to veto the resolution.
Rep. Andy Barr (R-Ky.), who introduced the measure in the House, said it was “a bipartisan, bicameral joint resolution disapproving of a Department of Labor rule-making that will politicize American’s retirement accounts and jeopardize their retirement security.”
In allowing pension funds to be used for ideological purposes, the Biden administration is “giving away the basic rights of American citizens, to give more power to the radical left,” Sen. Rick Scott (R-Fla.) stated.
“If you put money into a retirement plan, you expect to get the best return you can get; you expect that whoever is running it is a fiduciary to get the best return possible. What the Biden administration is saying is ‘no, you don’t have to do that … if you have some social agenda, you can focus on your social agenda.'”
Speaking on the Senate floor, Manchin said: “The ESG rule that we’re going to vote on later today is just another example of how our administration prioritizes a liberal policy agenda over protecting and growing the retirement accounts of 150 million Americans that will be in jeopardy. Our country is already facing economic uncertainty, record inflation, and increasing energy costs to keep Americans up at night, and put a squeeze on their pocketbooks.”
The White House denounced Congress’s attempt to overturn the ESG rule, branding it a “MAGA Republican” effort. Contrary to their historical positions, Democrats are now championing the freedom of pension funds and Wall Street asset managers to make their own investment decisions, while Republicans are attempting to limit fund managers to focusing purely on monetary returns.
“Republicans talk about their love of free markets, small government, and letting the private sector do its work. The Republican bill is the opposite of that,” White House press secretary Karine Jean-Pierre said during a news briefing on March 1.
As it relates to the dynamics of the Senate and where this is going, I leave that to Senator Schumer,” she said. “That’s something for him to speak to. What I can say is that if this bill reaches the president’s desk, he will veto it.”
“This isn’t about ideological preferences; it’s about looking at the biggest picture possible for investors to minimize risk and maximize returns,” Senate Majority Leader Chuck Schumer (D-N.Y.) stated on the Senate floor. “Why shouldn’t you look at the risks posed by increasingly volatile climate incidents?”
The conflict centers on an arcane pension law called the Employee Retirement Income Security Act, which is overseen by the U.S. Department of Labor, and an equally arcane progressive investment criterion called environmental, social, and governance (ESG).
[/size]
ERISA is a law enacted in 1974 to ensure that, among other things, those who manage company pension funds are held to the highest legal standard of fiduciary care, and that they act solely to maximize pecuniary, or monetary, returns for pensioners. That applies not only to what pension managers invest in, but also how they vote the shares they own.
Congress passed this law because companies were failing to honor their pension obligations to employees and because pension managers were misappropriating pension funds, in extreme cases using them as their own personal banks. In one of the more egregious abuses of retirees’ money, Teamsters President James “Jimmy” Hoffa was convicted in 1964 of fraudulently using the union’s pension fund as his personal bank, making loans to friends, buying houses, and otherwise using the funds for personal gain.
“The Hoffa thing was highly salient,” Robert Wright, a senior research fellow at the American Institute for Economic Research, told The Epoch Times. “Union-based funds were especially subject to malfeasance, to asset tunneling, to directing funds toward investments that aided the plan owners, the trustees, the unions as the case may be, rather than in the best interests of the employees.”
Asset tunneling is when those in control of corporate assets use them for their own purposes or personal gain.
One of the goals of ERISA was to prevent that kind of activity and set strict standards of fiduciary care. Increasingly, however, pension funds are today being used to support the ESG ideology, based on the claim that it will enhance returns for retirees while simultaneously solving environmental and social problems.
(This article is much longer. If you are interested in reading it in full, please go to site. Didn’t want to bore you)
https://www.theepochtimes.com/retirements-of-millions-of-americans-in-jeopardy-as-esg-rule-weakens-protections_5103667.html[/size]
The rule was challenged under the Congressional Review Act, which is a congressional oversight mechanism that can overturn rulings by federal agencies. Biden has threatened to veto the resolution.
Rep. Andy Barr (R-Ky.), who introduced the measure in the House, said it was “a bipartisan, bicameral joint resolution disapproving of a Department of Labor rule-making that will politicize American’s retirement accounts and jeopardize their retirement security.”
In allowing pension funds to be used for ideological purposes, the Biden administration is “giving away the basic rights of American citizens, to give more power to the radical left,” Sen. Rick Scott (R-Fla.) stated.
“If you put money into a retirement plan, you expect to get the best return you can get; you expect that whoever is running it is a fiduciary to get the best return possible. What the Biden administration is saying is ‘no, you don’t have to do that … if you have some social agenda, you can focus on your social agenda.'”
Speaking on the Senate floor, Manchin said: “The ESG rule that we’re going to vote on later today is just another example of how our administration prioritizes a liberal policy agenda over protecting and growing the retirement accounts of 150 million Americans that will be in jeopardy. Our country is already facing economic uncertainty, record inflation, and increasing energy costs to keep Americans up at night, and put a squeeze on their pocketbooks.”
The White House denounced Congress’s attempt to overturn the ESG rule, branding it a “MAGA Republican” effort. Contrary to their historical positions, Democrats are now championing the freedom of pension funds and Wall Street asset managers to make their own investment decisions, while Republicans are attempting to limit fund managers to focusing purely on monetary returns.
“Republicans talk about their love of free markets, small government, and letting the private sector do its work. The Republican bill is the opposite of that,” White House press secretary Karine Jean-Pierre said during a news briefing on March 1.
Jean-Pierre declined to elaborate when asked by The Epoch Times about the White House’s reaction to growing congressional opposition to ESG investing.
[size]As it relates to the dynamics of the Senate and where this is going, I leave that to Senator Schumer,” she said. “That’s something for him to speak to. What I can say is that if this bill reaches the president’s desk, he will veto it.”
“This isn’t about ideological preferences; it’s about looking at the biggest picture possible for investors to minimize risk and maximize returns,” Senate Majority Leader Chuck Schumer (D-N.Y.) stated on the Senate floor. “Why shouldn’t you look at the risks posed by increasingly volatile climate incidents?”
The conflict centers on an arcane pension law called the Employee Retirement Income Security Act, which is overseen by the U.S. Department of Labor, and an equally arcane progressive investment criterion called environmental, social, and governance (ESG).
[/size]
ERISA and Why It Matters
[size]ERISA is a law enacted in 1974 to ensure that, among other things, those who manage company pension funds are held to the highest legal standard of fiduciary care, and that they act solely to maximize pecuniary, or monetary, returns for pensioners. That applies not only to what pension managers invest in, but also how they vote the shares they own.
Congress passed this law because companies were failing to honor their pension obligations to employees and because pension managers were misappropriating pension funds, in extreme cases using them as their own personal banks. In one of the more egregious abuses of retirees’ money, Teamsters President James “Jimmy” Hoffa was convicted in 1964 of fraudulently using the union’s pension fund as his personal bank, making loans to friends, buying houses, and otherwise using the funds for personal gain.
“The Hoffa thing was highly salient,” Robert Wright, a senior research fellow at the American Institute for Economic Research, told The Epoch Times. “Union-based funds were especially subject to malfeasance, to asset tunneling, to directing funds toward investments that aided the plan owners, the trustees, the unions as the case may be, rather than in the best interests of the employees.”
Asset tunneling is when those in control of corporate assets use them for their own purposes or personal gain.
One of the goals of ERISA was to prevent that kind of activity and set strict standards of fiduciary care. Increasingly, however, pension funds are today being used to support the ESG ideology, based on the claim that it will enhance returns for retirees while simultaneously solving environmental and social problems.
(This article is much longer. If you are interested in reading it in full, please go to site. Didn’t want to bore you)
https://www.theepochtimes.com/retirements-of-millions-of-americans-in-jeopardy-as-esg-rule-weakens-protections_5103667.html[/size]
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