CONGRESSWOMAN ELISE STEFANIK
On Wednesday, June 22, 2016, the House will vote to override the President’s veto of H.J. Res. 88, Disapproving the Rule Submitted by the Department of Labor Relating to the Definition of the Term “Fiduciary”. H.J.Res. 88 was introduced on April 19, 2016 by Rep. Phil Roe (R-TN) and was referred to the Education and Workforce Committee which ordered the joint resolution to be reported by a vote of 22-14 on April 21, 2016. The House passed the resolution on April 28, 2016 by a vote of 234-183. The Senate subsequently passed the resolution on May 24, 2016 by a vote of 56-41. It was then sent to the President’s desk and vetoed on June 8, 2016.
H.J.Res. 88 would disapprove and nullify the rule issued by the Department of Labor (DOL) on April 6, 2016 amending the definition of “fiduciary” under the Employee Retirement Income Security Act of1974 (ERISA) and the Internal Revenue Code.
The Congressional Review Act, enacted in 1996, establishes special congressional procedures for disapproving a broad range of regulatory actions issued by federal agencies. If Congress passes a joint resolution disapproving the rule, and the resolution becomes law, the rule cannot take effect or continue in effect. The agency also may not reissue that rule or any substantially similar rule, except under authority of a subsequently enacted law.
Under the procedures established by the Congressional Review Act, the House (April 28) and Senate (May 24) passed this resolution to prevent DOL’s fiduciary rule from going into effect. The President vetoed the resolution on June 8. In order to override the President’s veto, both the House and Senate must pass it by a two-thirds supermajority vote.
In 1974, Congress enacted ERISA, which governs employee benefit plans. Under ERISA, anyone that exercises discretionary authority over a benefit plan’s management, assets, or administration, or renders “investment advice” for a fee to the plan is a “fiduciary”. A fiduciary must act “solely in the interest of the participants and beneficiaries” for the “exclusive purpose” of providing benefits and defraying expenses.
In 2010, DOL issued a proposed regulation expanding the definition of “fiduciary” which was later withdrawn. On April 20, 2015, DOL proposed a new regulation which was finalized on April 6, 2016. This rule has raised concerns that individuals could lose access to trusted financial advisors, raise the cost of receiving advice, and lead to fewer small business offering retirement plans.
According to Chairman Kline, this rule “creates a convoluted regulatory scheme that will drive up the cost of retirement advice. Men and women will lose access to their trusted financial advisors. Providing basic information about retirement planning will be severely restricted, and it will be much harder for small business owners to provide retirement plans to their workers.”
A Congressional Budget Office estimate is unavailable.
For questions or further information please contact Molly Newell with the House Republican Policy Committee by email or at 2-1374.