Two US House committees passed measures July 10 that would inhibit the implementation of the Labor Department's controversial retirement security rule.
The House Appropriations Committee passed the Fiscal Year 2025 Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, which would bar the department from using funding made available by the act to "administer, implement or enforce" the fiduciary rule. The proposed legislation passed 31-25.
In addition, the House Education and the Workforce Committee voted to send a bill providing congressional disapproval of the department's retirement security rule to the House floor for a vote.
Legislation passed by the Republican-controlled House still faces an uphill battle in a Democratic-controlled Senate.
The Labor Department's final fiduciary rule, announced April 23, impacts how retirement products are sold by updating the definition of an investment advice fiduciary under the Employee Retirement Income Security Act. The updated definition will be effective Sept. 23 and applies whenever financial services providers who are compensated give investment advice to retirement plan participants, account owners and plan officials responsible for administering plans and managing assets.
The rule has been the subject of controversy since it was first proposed and has garnered pushback from insurance industry trade groups and state insurance regulators. At least one life insurer has spoken out against the rule, saying it could have the "unintended consequence" of stifling consumer access to certain financial tools.
In a press release, the American Council of Life Insurers, the Insured Retirement Institute and several other trade groups applauded the measures passed by the House committees.
"The actions taken today by the US House Appropriations Committee and the Education and the Workforce Committee send a clear message that the Labor Department's fiduciary-only regulation does not align with Congress' efforts to expand retirement security for all Americans through the increased availability of lifetime income options," the release said.
A spokesperson for the Labor Department defended the rule, saying in an email that it is "essential" to ensuring protection for retirement investors.
"When investors get advice from a trusted financial professional about their retirement savings, they expect that advice to be in the customer's best interest, not the financial professional's," the spokesperson said. "This rule makes that a reality."