A nonprofit publication of the Kentucky Center for Public Service Journalism

Three Kentucky officials join in supporting opposition to proposed U.S. Dept. of Labor rule on retirement savings

Kentucky Auditor Mike Harmon has joined State Treasurer Allison Ball, and Attorney General Daniel Cameron, as well as some of their counterparts in other states, in opposition to a proposed United States Department of Labor rule that they say could risk retirement savings.

The three Republican Constitutional officers criticized the proposal, which they say would promote harmful and risky investment guidelines for employee retirement plans by enabling Employee Retirement Income Security Act, or ERISA, fiduciaries to make investment decisions based on non-finance related data like climate change and social issues.  They join three dozen state attorneys general and financial officers across the country in opposing the proposed change.

“Many retirement plans are greatly underfunded, so it is important that investment decisions for these plans remain based on wise fiscal strategies and not based on activism and politics,” said Harmon. “Given that the states have made promises of specific income streams to retirees, it is imperative that we as leaders, not allow anyone to jeopardize those promises or add additional burdens to taxpayers.”

The proposed rule change would allow plan sponsors and investment managers to implement environmental, social, and governance, or “ESG” investment strategies in retirement plans as a default option. ESG funds dissolve the traditional fiduciary obligations owed to beneficiaries and instead prioritize social and political action.

In a letter sent to The U.S. Department of Labor’s Office of Regulations and Interpretations, the state officials said: “It is our position that social and political issues should not be considered by fiduciaries in employee retirement savings investment decisions.  We are not opposed to any person or entity considering ESG or other social factors when investing their own money; individuals and companies may promote social causes through their investments to the extent they desire.  But we are opposed to investment managers and employers being encouraged or mandated to consider ESG factors and protected from legal action when they do.”

Here is a link to the 12-page letter.

Related Posts

One Comment

  1. Ruth Bamberger says:

    What the Labor Department is doing is applying an ethic to investment decisions. This in itself does not increase the risk to pension plans. Eliminating investments in enterprises that exacerbate climate change, practice unfair discrimination and exploit workers should not be considered political; they are the morally correct thing to do. Many Americans are now making investment decisions not just for profit, but choosing options that will also enhance the quality of life. This is now what the Labor Department is attempting to do, and our KY officers should support this policy..

Leave a Comment