If elected president, Democratic nominee Joe Biden is likely to reverse the SEC’s Regulation Best Interest and force the Department of Labor to put out more stringer rules on retirement savings advice than what it recently proposed.
The Democrats’ party platform, released Friday, doesn’t explicitly name either of the regulations, but under the heading “Guaranteeing a Secure and Dignified Retirement” takes aim at retirement-related regulations instituted during the administration of President Donald Trump.
“Democrats believe that when workers are saving for retirement, the financial advisors they consult should be legally obligated to put their client’s best interests first,” the platform states. “We will take immediate action to reverse the Trump Administration’s regulations allowing financial advisors to prioritize their self-interest over their clients’ financial wellbeing.”
Critics such as Barbara Roper, director of investor protection at the Consumer Federation of America, have slammed the SEC’s Reg BI — whose compliance deadline was June 30 — for not going far enough to ensure investor protection, as reported.
And the DOL recently revealed that its proposal to revamp rules on financial advice — submitted at the end of last month to the Office of Management and Budget for review — focuses on an exemption that would allow financial institutions and professionals to receive a wide variety of payments that otherwise violate prohibited transaction rules. Investor protection and consumer advocacy groups say the proposed changes would “allow increased conflicts of interest in retirement investment advice” and have called for an extension of the 30-day comment period to 90 days.
Multi-employer plans, Social Security
In the recently released party platform, meanwhile, the Democrats also signal that they’ll promote state-level initiatives to promote retirement saving, including through the use of multi-employer plans.
“We will support approaches to retirement saving that enable workers and retirees to prepare for and prosper in retirement, including reforms that will allow states and municipalities to create public individual and pooled retirement account options that are easy for workers to access and understand,” the Democrats say in the platform.
Additionally, the Democrats are vowing to protect Social Security benefits, as well as to make them more progressive by extending them to a broader swath of the population.
“We will enact policies to make Social Security more progressive, including increasing benefits for all beneficiaries, meaningfully increasing minimum benefit payments, increasing benefits for long- duration beneficiaries, and protecting surviving spouses from benefit cuts. We will eliminate penalties that unfairly reduce public sector workers’ earned Social Security benefits,” the Democrats say. “In light of weakened retirement security for unpaid caregivers and caregivers for family members, who sacrifice not only wages but Social Security benefits when they swap paid labor for unpaid care work, Democrats support Social Security reform which better accounts for the challenges facing unpaid caregivers — including incremental reforms to the benefit formula to mitigate the penalty for unpaid care.”
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