The News: The Wisconsin Institute for Law & Liberty (WILL) filed for a preliminary injunction to stop the U.S. Secretary of Labor’s new rule permitting the use of environmental, social, and governance (commonly referred to as “ESG”) factors in retirement investing. A lawsuit was filed by WILL in the United States District Court for the Eastern District of Wisconsin last week.
WILL believes that relying on ESG factors not only violates the Employment Retirement Income Security Act of 1974 (ERISA), which governs the operation of retirement plans and protects the hard-earned savings of millions of employees from mismanagement and abuse, but undermines the authority of Congress.
The Quote: WILL Associate Counsel, Kate Spitz, stated, “140 million Americans are not asking for their retirement plans to be politicized, but that’s exactly what’s happening here with the Biden Administration’s new rule. WILL is proud to challenge this rule and will continue to stand strong in defense of liberty, freedom, and a constitution that clearly defines the limits on government authority.”
Background: ERISA protects retirement savings from mismanagement and abuse, and imposes fiduciary duties on those who administer the plans. Plan participants are entitled to receive information about their plan, the plan’s performance, and the effect of that performance on the benefits they receive. Congress has provided that a fiduciary shall discharge its duties with respect to an ERISA plan “solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan.”
However, under the Biden Administration, the Secretary of Labor promulgated a new rule last December that allows and encourages plan administrators to consider ESG factors when making investments on behalf of plan beneficiaries. Studies have shown that noneconomic factors—like ESG investing—are not as profitable as investing in standardized portfolios, such as investing in an index like the Standard & Poor’s 500 or the Nasdaq. Under the rule, Plan administrators could risk beneficiaries’ investments for progressive policy dreams.
WILL recently joined more than 100 organizations and officials in signing a coalition letter to Congress, opposing the 401(k) rule and supporting the congressional effort to overturn it. Now, WILL is pursuing legal efforts to stop the politicization of retirement incomes through executive fiat because Congress never granted President Biden the authority to alter ERISA’s fiduciary obligations to retirees.
This is WILL’s 7th lawsuit against the Biden Administration.
Read More:
- Preliminary Injunction, February 28, 2023
