Murray Says Fiduciary Fix Needed, Blasts DOL Proposal

Considering the Department of Labor’s proposed prohibited transaction class exemption for investment advice fiduciaries, Sen. Patty Murray (D-WA) indicated at the 2020 NAPA D.C. Fly-In Forum July 21 that it may be time for a legislative rewrite.  

In response to a question about whether she sees a role for Congress to update fiduciary standards in light of the 5th U.S. Circuit Court of Appeals’ ruling vacating the Obama era fiduciary rule, the ranking Democrat on the Senate Health, Education, Labor and Pensions Committee, expressed her displeasure with the current efforts by the DOL.   

“I do think people deserve a better rule than the standard that was created 40 years ago, which is essentially what this [new] proposal offered,” Murray stated. “It simply does not do enough to make sure clients’ interests come first. And like so much of our retirement policy, the fiduciary standard needs a serious update. And the frustrating things is we had one, but the Trump administration stood by and let it get struck down in court and refuse to fight for the Obama era rule even though every previous court had upheld it,” she noted. 

She went on to express frustration with the 5th Circuit ruling and the current pace of the DOL’s new proposed exemption. “To make matters worse, Secretary Scalia came on board—he was the person who masterminded the case which struck down the stronger fiduciary rule so that he could be in charge of writing a new one,” Murray noted.

“I’m also concerned about how fast they’re trying to rush through this process right now. I’m urging the department to slow down and extend the comment period and hold a hearing so we can raise some of our concerns with this new proposal. I will keep pressing them on that,” Murray further warned.

ESG Dispute 

Murray also reiterated her concern about the DOL’s proposed regulation clarifying investment duties of ERISA plan fiduciaries in relation to environmental, social and governance (ESG) investing. In response to a question about her perspective on the proposal, she stated that “that rule seems to me to be incredibly ideological and damaging to me.”

“Besides the insinuations we’ve seen from Secretary Scalia, we actually know that investments that take environmental, social and governmental factors into consideration regularly outperform traditional investments,” Murray continued. “Knowing whether a company has a diverse workforce and whether it has sustainable practices—those are actually helpful indicators that people should be able to consider when evaluating these long-term investments. So, the proposal is incredibly out of tune with what people across the country are calling for.” 

Murray noted that she has already written to the DOL to express opposition to the rule and will continue to raise concerns about it. 

Cybersecurity Threats

Turning to the growing threat of cybersecurity to retirement plans, Murray suggested that there’s no reason for it to be a political issue. “The bigger challenge is that this is not a new threat to retirement security but a constantly evolving one,” she stated, observing that there is not a one-size-fits-all solution and that she is looking for principles-based approach.  

“I also believe the retirement community needs to start thinking about how cybersecurity and data storage relates to the responsibility of a fiduciary,” she suggested in welcoming ideas to address the issue. Murray also noted that she has asked the Government Accountability Office to analyze the issue and make recommendations. 

Policy Priorities

As for other policy priorities, Murray noted that she is very supportive of policies that will help women close the pay and retirement savings coverage gap, observing that women now make up half of the workforce but are 80% more likely to live in poverty after they turn 65 and that women retiring today have about four-fifths of retirement income as that of men. Murray contended that policymakers must start taking a holistic view of problem in coming up with potential solutions.  

One idea Murray cited was extending the same spousal protections for that women receive for DB plans to DC plans. She also suggested looking at making QDROs more available to everyone and changing the RMD rules so that women can delay taking distributions from their retirement accounts. 

Murray also indicated that she will be pushing to address the multiemployer plan crisis in the next COVID-19 stimulus bill, as well as additional flexibility for retirement plan hardship withdrawals.