Working people saving for retirement are losing billions

 

The fiduciary rule is an Obama-era regulation that protects Americans’ hard-earned retirement savings by requiring that financial professionals offering retirement investment advice put their clients’ interests first. The rule was supposed to be implemented on April 10, 2017. But the Trump administration has repeatedly delayed enforcement of the rule, most recently to July 1, 2019, and is using the rule-making process and delays to significantly weaken the rule.

Because of the enforcement delays, industry actors presenting themselves as neutral advisers can continue to steer retirement savers to products with high fees and commissions that benefit the advisers but reduce net returns for the client. The map shows the annual costs retirement savers in each state incur due to underperforming IRA assets that are invested in products for which savers received “conflicted” advice (that is, advice provided by financial advisers whose earnings depend on the actions taken by the client).1

EPI has used the data on annual losses to retirement savers from conflicted advice to estimate that an August 2017 Department of Labor directive delaying the rule for 18 months, to July 1, 2019, would cost workers saving for retirement $10.9 billion dollars over the next 30 years.

1. Underperformance of investment returns in which savers received conflicted advice can be attributed to a wide range of factors, including high fees, high trading costs, poor market timing, and increased risk exposure without increased returns.

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Reposted from EPI

Posted In: Allied Approaches

Union Matters

Want A Stronger Economy? Try Collective Bargaining

By Bethany Swanson
USW Intern

Well established collective bargaining systems improve wages, working conditions, and economic equality. They also can protect the economy as a whole against downturns.

These were the findings of a study published last week by the Organization for Economic Co-operation and Development (OECD), an intergovernmental agency founded after WWII, dedicated to improving economic and social conditions for workers across the globe.

Yet collective bargaining systems are facing serious challenges in many OECD countries, which make it unsurprising that the study also revealed that even with the unemployment rate decreasing, wage growth remains lower than it was before the recession in nearly every OECD country.

In the United States, which ranks at the bottom for both collective bargaining and worker security, workers are especially vulnerable.

The OECD found that countries like the United States that have decentralized collective bargaining systems generally have slower job growth and higher unemployment than other advanced nations. It also concluded that low paying jobs can create a slowdown in productivity and a sluggish economy.

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