President Joe Biden’s going after 401(k) retirement accounts, risking millions of workers’ comfortable retirements.
If you put money into a 401(k), beware. Until now, the law always required fund managers entrusted with your savings to invest the money where it’s expected to get the top return for you. Period. But on Nov. 22, Biden’s Labor Department announced a rule change that goes into effect the end of January. It will allow fund managers to invest your money in the stocks of companies that favor left-wing policies, even if they earn a lower return.
It’s legalized theft. The future return on your retirement nest egg is being sacrificed to advance a woke agenda.
A lower return means you’ll have to work more years before retiring or start putting more into your 401(k). Or settle for a lesser standard of living in the final years of your life.
Biden’s new rule paves the way for your 401(k) savings to be put into what are called ESG funds. But you can stop it from happening to you if you’re vigilant.
What is ESG? “E” stands for environment, “S” for social and “G” for governance, meaning who gets hired or put on the company board. ESG funds generally invest in companies that oppose fossil fuels, support unionization and stress gender and racial diversity over merit.
From the worker’s point of view, ESG stands for Expect Slower Growth. These funds charge higher fees and often produce lower returns, especially now when oil company profits and stocks are soaring while the tech companies ESG funds tend to favor are doing poorly.
Two aspects of the Labor Department’s rule should cause you to worry. Both reverse worker safeguards adopted by the Trump administration.
First, Trump’s Labor Department stated that fund managers are obliged to put “pecuniary” considerations above other issues, such as politics. They could consider “non-pecuniary” issues only as a tiebreaker when two companies pose the same risks and opportunities for investors. Biden’s Labor Department eliminated that standard, saying it had a “chilling effect” on ESG sales.
The Biden rule says 401(k) managers are “not prohibited from selecting the investment, or investment course of action, based on collateral benefits other than investment returns.” Politics can take priority. The new rule cites Biden’s goal to “prioritize both environmental justice and the creation of well-paying union jobs.”
The rule blathers on about the vague benefits of unionization. But the authors produce zero evidence that unions improve returns for investors.
Only 6% of the U.S. private sector workforce is unionized. Biden is determined to increase that by making the $6.8 trillion held by 401(k) plans more available to union companies than nonunion ones.
The second worrisome change is that Biden makes ESG funds eligible to be the “default” fund when a worker doesn’t choose a fund. The Trump administration banned that. Biden’s rule will push more workers unwittingly into these funds.
Biden’s doing an end run around democracy, trying to change corporate America without having to pass laws in Congress. Companies need investment capital. The more 401(k) money is controlled by ESG funds, the more pressure can be put on companies to adopt the ESG agenda — climate change, diversity and unionization — whether they like it or not. Biden’s buddies on Wall Street will do the financial arm twisting.
Democrats invented ballot harvesting. Now they’re on to 401(k) harvesting.
Biden’s new rule eventually will be challenged in court, and probably struck down. The Labor Department characterizes it as a mere clarification of the 1974 law enacted by Congress — the Employee Retirement Income Security Act — that requires 401(k) retirement plan sponsors to act “solely in the interest” of savers. In truth, the new rule reverses ERISA. The Labor Department is trying to do what only Congress has the power to do.
In the meantime, employees should avoid getting stuck in an ESG plan unless they’re willing to sacrifice their retirement to advance a left-wing political agenda.
Elon Musk nailed it, tweeting: “ESG is the devil.”
Betsy McCaughey is a former lieutenant governor of New York and chairman of the Committee to Reduce Infection Deaths. Follow her on Twitter @Betsy_McCaughey. To find out more about Betsy McCaughey and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website.
COPYRIGHT 2022 CREATORS.COM
What happened to Fiduciary responsibility? Just more lawlessness by this administration. When the Republicans take over Congress in January, hopefully this latest over-reach will be stopped in it’s tracks.
With Federal Reserve n the Elites buying up the sold stocks, to make the sh*tting President look good, as they done with Obama…
Your 401K plan will be worthless anyways…
They run the show, when they get where they want, they can sell any amount or all to crash the Market anytime they wish…
Don’t think for one moment they won’t…
IT’S THE PLAN…
GOING OUT IN A BANG…
HURTING MILLIONS !!!
PRESIDENT TRUMP GOT EVERYONE’S 401(k)’s BUILT UP
and
DICTATOR Beijing biden DESTROYS
401(k)’s ON PURPOSE JUST LIKE HE’S DESTROYING OUR COUNTRY
ON PURPOSE.
A 401(k) is never a vehicle for making political statements. It’s sole purpose is to maximize returns and minimize expenses.
I never trusted the company sponsored fund managers offered by the custodian of my employer’s 401(k) plan to make any financial decisions for me. I never used those fund managers or allowed “default” decisions to be made for me.
Thank you for the warning.
Good article but it’s short on content that is always kept hidden from the American public. This is all backed and promoted by the major financial institutions who’s leaders are CFR and/or WEF members. The most well known, Larry Fink at Blackrock.
The article states “employees should avoid getting stuck in an ESG plan”, but never says how. What choices do employees have when their company has their 401Ks with, say, Vanguard?
We have watched an empowerment of a criminal enterprise, and America is a failing nation because the Democrats, the RINO’s, and the News Media are striving for an American down fall.
I moved my retirement to Ave Maria Funds. At least they invest consistent with my religious beliefs. And if the economy continues its Biden downward projectory at least I have a prayer.
This is government interference in the private sector that favors those companies that support Democratic Party policies over the investor.
And how is this in keeping with his slogan of “Building a Better America”? Could not say I was HAPPY spending all of my retirement savings UNTIL NOW.
ESG is a blatant end run around Congress & is intended to fund Green Deal of Biden . This 401-K was started around 1980 & I am positive that you can find thousands of people that will verify that this is funding their retirement & why does U S Government want to ruin this 40-years later. This end run around Congress must be stopped…..and I mean by us voters.
Exactly what do us 80 year old do with NO money WE earned and saved like they told us to do IF they take our $$$. WHO gives them the authority to take someone else’s money???
The 401s described in this article, are usually placed in a money management program by the company not the employee, so unless the employee gets to choose the bank, this ERISA is going to lower the potential earnings over the years. Now if the employee leaves the company and is able to take the 401 account with them, they will then have the decision to monitor the account investment and change how the money is invested. I am not sure if you can do this while working for the company but if you get the quarterly or yearly reports on the account then you do have a say in the investment of the funds in your specific account. I know that I did that by calling the fund program directly with my account number. Don’t let full control be out of your hands.
Demonrats deserve dirt naps. I truly despise them. ????
“Until now, the law always required fund managers entrusted with your savings to invest the money where it’s expected to get the top return for you. Period.” this is possibly THE SINGLE MOST IGNORANT MISINFORMED statement ever published right after “God is dead”. the use of the word “required” and the phrase ” invest the money where it’s expected to get the top return ” are ridiculous. Appropriate to the investor’s risk tolerance and objectives are the requirements. find a real profession manager before you chase ones simply touting “top returns”.
Biden has no shame when he is willing to take another end run around Congress to push his Green Deal. Anyone with 401K needs to be aware of this.