Page 13 - Investment Advisor July/August 2022

Investment Advisor in an email. troubles,” according to the policy group. adults, and the very old,” the report said.
The legislation adopts the consumer The previous version of Social Security “To obscure the cost of its benefit expan-
price index for the elderly as the basis 2100 would have subjected earnings over sions, the legislation would set them all
of the annual cost-of-living adjustment $400,000 to the payroll tax while also to expire after five years.”
(COLA) and applies the payroll tax to gradually raising the payroll tax rate A Sacred Trust would close half of the
annual wages above $400,000. “We are from 12.4% to 14.8%, the report states. solvency gap, while SS2100 closed the
in the process of working toward mark- A Sacred Trust “removes nearly half full solvency gap, the committee said.
up, which will be held hopefully very of the solvency-improving revenue from “Assuming the five-year benefit expan-
soon,” Larson said. the original bill, while dramatically sions are made permanent, as clear-
A new report by the Committee for expanding new spending — but making ly intended, we estimate they would
a Responsible Federal Budget criticizes that spending temporary to cover up consume more than all of the revenue
the bill for only keeping Social Security the costs. Specifically, the new legisla- increases. In fact, a permanent ver-
solvent until 2038 — only four years from tion removes adjustments to the payroll sion of A Sacred Trust would actually
its current projected depletion date. The tax rate — which were responsible for worsen solvency.”
bill is a “substantial downgrade from closing two-thirds of the solvency gap The Sacred Trust bill would push to
2019’s Social Security 2100 Act (SS2100), — while adding eight new benefit expan- 2038 the trust fund’s depletion date,
which we’ve praised as a responsible sions that would further increase bene- at which it would be forced to cut
solution to Social Security’s financial fits for disabled workers, spouses, young benefits 20%.

DOL Provides Fiduciary Rule Update
The Labor Department will factor in other agency rule- in a way that doesn’t disadvantage the people that made the
makings, like the Securities and Exchange Commission’s decision to implement 2020-02?” Khawar said.
Regulation Best Interest, as it crafts its fiduciary rule, Ali When asked if EBSA is waiting for ERISA attorney Lisa
Khawar, acting assistant secretary for Labor’s Employee Gomez, President Joe Biden’s nomination to head EBSA, to be
Benefits Security Administration, said in May. approved by the Senate before sending the fiduciary rule to
As to when Labor’s new fiduciary rule will land at the Office OMB, Khawar told reporters: “No. On any number of issues
of Management and Budget for review, Khawar declined to the question really is whether or not we’re ready to go, not
offer a date. whether the right person is in place.”
EBSA “has an obligation to talk to other regulators where Brad Campbell, partner at Faegre Drinker’s Washington
there are are issues of common concern,” Khawar said during office and former head of EBSA, predicted, correctly, in late
remarks at the Insured Retirement Institute’s annual conference, 2021 that Labor would miss a December deadline it had set
held in Washington. “We talk to SEC, NAIC … that work is ongo- to release a new fiduciary rule. He said a new rule wouldn’t
ing. We’re talking a fair amount to the SEC about these issues.” likely come until “the end of spring” 2022.
He added: “Absolutely, you can expect to see whatever it
is that we ultimately do [with the fiduciary rule] will reflect Fidelity Crypto 401(k) Concerns Linger
the work of other regulators, as well as the work of the prior Khawar also told reporters that Labor still has concerns about
administration on this front” because the “landscape is not Fidelity’s crypto 401(k) offering after a recent “cordial but
the same as when we first began this project many years ago.” candid” talk with the Boston-based firm.
“We’ve met with” Fidelity, Khawar told reporters. Labor
Fiduciary PTE “had an interesting conversation where they [Fidelity] walked
The new fiduciary advice exemption issued by the Trump admin- us through, in more detail, how they saw their offering work-
istration, PTE 2020-02, which went into effect on Feb. 16 ”is a ing, what they viewed as their protections,” he said. “I think
very significant development in the ERISA space,” Khawar said. they understand the concerns that we have.” He: “This is an
The exemption, he continued, “is not mandatory, not everyone important issue for us.”
has to implement 2020-02 as part of their business model; that’s During his comments at the IRI event, Khawar noted that
one of the other things we’re thinking about: With the regulatory cryptocurrency is an enforcement focus for EBSA and that
changes at [Labor] and other regulators, how do we navigate it?” Labor’s concern — as noted in a recent cryptocurrency
Labor continues to think through: “What do we need to do guidance — centers on workers “being marketed crypto in their
and how can we make sure that it’s [the fiduciary rule] done 401(k), where there’s some element of pushing people into it.”

JULY/AUGUST 2022 INVESTMENT ADVISOR 11