The Kentucky Chamber of Commerce recently sent letters to the Kentucky Congressional delegation urging opposition to the Department of Labor (DOL) proposal to expand the definition of fiduciary investment advice under the Employee Retirement Income Security Act (ERISA).
The proposed rule would increase the cost of professional and personal investment advice while decreasing access for small businesses and small investors. The proposal would also disproportionately impact low and moderate income Americans saving for retirement—especially small business employees who utilize the IRA. The additional burdens posed on business will stifle their ability to offer their employees a competitive retirement savings package.
To compete with larger companies and attract employees, small businesses need affordable retirement savings plans. Many use SEP and SIMPLE IRA plans because they provide a simple, cost-effective way for small businesses to contribute to their employees’ retirement. The DOL proposal threatens the continued success of these plans and the ability of small businesses to provide retirement security at a time when millions of Americans have reached or are approaching retirement age.
A recent study commissioned by the U.S. Chamber of Commerce found that this proposed rule could impact 9 million small business households, which in turn would threaten $472 billion in assets originating from small business retirement plans.
Following a 2014 survey of small businesses by Greenwald & Associates, 30 percent of businesses with a retirement plan indicate that they are somewhat likely to drop their plan following the enactment of this proposal while 50 percent of businesses without a plan indicate that this proposal would reduce their likelihood of offering a retirement plan; 36 percent of those businesses indicate that it would greatly reduce that likelihood.
The Kentucky Chamber feels the proposed DOL rule is the wrong way to achieve the promotion of transparency and accountability for Americans’ retirement savings. The business community realizes this rule will cause small business owners and their employees to lose access to retirement saving options and make it harder for financial advisors to offer good counsel.
If you or your company would like to sign on to a letter in opposition to this proposed rule please sign on via the following link: http://www.centerforcapitalmarkets.com/fiduciary-duty/