Lawmakers introduce bill to block Labor's new retirement advice rule

At least 18 House and Senate members are seeking to overturn the Labor Department's new retirement advice rule through legislation.

The joint resolutions introduced May 15 with the support of 17 Republican sponsors or supporters and one Democrat, Sen. Joe Manchin of West Virginia, would block the "retirement security rule" from going into effect if it passes both houses of Congress. While it's not likely to amass the votes without drawing more members from the slim Democratic majority in the Senate, the measure comes shortly after other opponents filed a lawsuit earlier this month. 

Industry advocacy groups quickly released statements supporting the legislation that is part of the lawmakers' authority to check the executive branch under the Congressional Review Act.

"The Biden administration is imposing burdensome regulations that restrict investing opportunities, especially for lower- and middle-income Americans. Americans should be encouraged to save by, among other things, minimizing hassle," Bill Cassidy, a Republican from Louisiana who's the ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, said in a statement. "This is whether they are saving for retirement, a child's education, or for the unexpected life event. This CRA stops the Biden administration from making it harder for Americans to invest in their future."

READ MORE: How prohibited transaction exemptions will change under DOL's fiduciary rule

Critics of the rule, such as the Insured Retirement Institute and the National Association of Insurance and Financial Advisors, sent letters praising the legislation.

"The final rule creates significant hardships for today's workers and retirees, making it much more expensive and complicated — and for many consumers, impossible — to access reliable professional guidance," Wayne Chopus, the CEO of IRI said in a statement. "That is why IRI supports the passage of a CRA resolution. Congress must disapprove the final rule to prevent the deepening of the retirement savings gap and the establishment of unnecessary barriers for workers to overcome as they seek a secure and dignified retirement."

In a similar statement, NAIFA CEO Kevin Mayeux said that the "current rule will harm the very people the DOL claims to want to protect — low- and middle-income savers — by depriving them of retirement-planning products and services."

In the language of the rule issued last month, the agency specifically rejected the notion that expanding the fiduciary duty to rollover recommendations and certain insurance sales to retirement-plan savers would restrict access to advice or products.

"When investors get advice from a trusted financial professional about their retirement savings, they expect that advice to be in the customer's best interest, not the financial professional's," Labor spokesman Grant Vaught said in a statement. "This rule makes that a reality. The Department continues to believe that this rule is essential to ensuring that retirement investors are protected."

READ MORE: Rule check: All you need to know about DOL's retirement regulation

For those trying to overturn the rule, the participation of Manchin signals that there may be at least a few Democrats who could be convinced to vote for the legislation.

"This Department of Labor rule is yet another example of dangerous federal overreach," Manchin said in a statement. "While I understand the Administration's intent to protect Americans' retirement savings, the truth of the matter is this does the exact opposite. If allowed to go into effect, the rule has the potential to cause many West Virginians to actually lose access to investment advice due to how broadly the rule defines fiduciary."