Prior to the Biden administration, there was a sense of assurance that those handling your pension or retirement fund were focused on maximizing your benefits, as required by law. That assurance is now in question due to a new Department of Labor rule under the Biden administration. This rule enables plan managers to invest your money towards political, social, or ideological aims without your consent. 

Since 1974, the Employee Retirement Income Security Act (ERISA) has ensured that retirement plan fiduciaries operate plans solely for the interest of participants and beneficiaries. However, the new rule by the Biden-Harris administration interprets ERISA differently, allowing fiduciaries to consider progressive social objectives relating to climate change, labor law, or corporate governance when making investment decisions. 

This new rule enables fiduciaries to create ties among investment alternatives, which could steer funds towards political goals rather than what’s best for plan participants. The Biden-Harris rule opens the door for ERISA fiduciaries to prioritize their political agendas over plan beneficiaries’ financial security, potentially leading to lower returns and less retirement income for retirees. 

Efforts to reverse this politicization of retirement savings are underway, but faced resistance from President Biden. Now, the Biden Labor Department’s rule is being challenged in a court case known as State of Utah v. Su. With the recent Loper decision eliminating deference to government agency interpretations of statutes, the Labor Department’s attempt to allow politics to influence retirement plan management is at risk of being overturned in court. 

Given ERISA’s clear directive for plans to be managed in the best interest of participants and beneficiaries, the Biden Labor Department’s attempt to deviate from this purpose is being met with skepticism. Congress’s intent in enacting ERISA and disapproving the Labor Department’s rule emphasizes that retirement plans should be managed solely for the benefit of retirees. The hope is that the courts will uphold this intent against any attempts to politicize retirement savings.