Attorney General Jason Miyares filed a lawsuit alongside 24 other state attorneys general challenging a Department of Labor rule which would affect the retirement accounts of millions of people. The rule would allow 401(k) managers to direct their clients’ money to ESG (Environmental Social Governance) investments and runs contrary to existing rules and the Employee Retirement Income Security Act of 1974 (ERISA).
The new rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” will take effect on January 30, 2023. Two-thirds of the U.S. population’s retirement savings accounts would be affected, totaling $12 trillion in assets. Strict laws placed in ERISA are intended to protect retirement savings from unnecessary risk.
“The Biden Administration continues to use other people’s money to achieve its political goals. Virginia families have worked hard to build their retirement accounts. The federal government should be protecting that money, not putting it at risk to support the progressive ESG agenda. But this new rule—created by an unelected and unaccountable bureaucracy without input from Congress or the American people—puts progressive politics above Virginians’ financial wellbeing and security. It is another unilateral and illegal power grab by the Biden Administration.” said Attorney General Miyares.
From the complaint: “[T]he 2022 Investment Duties Rule makes changes that authorize fiduciaries to consider and promote “nonpecuniary benefits” when making investment decisions. … Contrary to Congress’s clear intent, these changes make it easier for fiduciaries to act with mixed motives. They also make it harder for beneficiaries to police such conduct. ”
Read a copy of the complaint here.