Public Interest Organizations Join Forces to Protect Americans’ Retirement Savings
SaveOurRetirement.org will educate workers and retirees about the “Retirement Advice Loophole” – and mobilize public support to close it
Washington, D.C., January 15, 2015 - A broad range of national public interest organizations have joined forces in a new campaign to protect Americans from the “Retirement Advice Loophole” that can drain away thousands of dollars of hard-earned savings from a single retirement account. As a focal point for their efforts, the groups are launching SaveOurRetirement.org, a new website that will educate workers and retirees about threats to their retirement security under current law and mobilize their support for long-delayed consumer protections that the U.S. Department of Labor is trying to adopt.
The organizations supporting the new campaign include some of America’s most prominent retiree, labor, consumer, and financial reform groups:
- American Federation of State, County, and Municipal Employees (AFSCME)
- American Federation of Labor and Congress of Industrial Organizations (AFL-CIO)
- Americans for Financial Reform
- Better Markets
- Consumer Federation of America
- Pension Rights Center
Because of the Retirement Advice Loophole – which dates back to the 1970s – Wall Street brokers and other financial firms with major conflicts of interest are allowed to provide investment advice that serves their own interests instead of what’s best for their clients. For example, they can sell financial products that pay large commissions but hurt their clients with unnecessary fees, poor returns, or excessive risks. Millions of Americans are affected by this loophole every year without even knowing it, and it is draining away their retirement savings.
Right now, some advisers are required to put their customers’ interests first while others are not – and it is often extremely difficult for workers and retirees to know which type of adviser they are dealing with.
The existing, outdated rules were written during the Ford Administration, before 401(k) plans existed and when Americans had just $3 billion invested in IRA’s. Today, Americans have more than $12 trillion invested in IRAs, 401(k) plans, and other defined contribution plans. With $12 trillion in assets at stake, the Wall Street firms that reap huge profits by putting their own interests ahead of their clients’ best interest will spare no expense to obstruct reform.
The U.S. Department of Labor is expected to take action soon to update the rules for the first time in 40 years. The revised rules can close the retirement loophole by limiting conflicts of interest and requiring everyone who gives retirement investment advice to act solely in their client’s best interest – a common sense standard known as the fiduciary duty.
Over the next several months, the participating organizations will use SaveOurRetirement.org as a focal point for broad-based public outreach. The goal is twofold: 1) educate Americans about the threats to their retirement from the current system and about ways they can protect themselves, and 2) mobilize public support for an effective consumer protection rule from the U.S. Department of Labor that will close the loophole for good.
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