Every American employee should have a fair shot at a decent retirement.
But according to Jerry Bowyer, chief economist of Vident Financial, retirement pensions are under attack. As Bowyer writes at WORLD magazine, President Biden’s first veto in office, nixed a bipartisan resolution that would have protected Americans’ retirement funds from ESG investing.
Contrary to the President’s claims, Bowyer argues, the bill he vetoed simply reaffirmed an earlier Department of Labor policy which ensured that Wall Street executives, and not ordinary Americans, will foot the bill if their social justice causes fail to earn high returns:
The rule change under Scalia simply made clear that the pension managers had to shoulder the burden of proof. Want to exclude oil companies? First, explain precisely why you think that will help a retired school teacher pay her bills.
Biden reversed all of that, waving ESG management through the checkpoint with no actual checking. Excluding oil in the name of climate risk was automatically deemed legitimate with no rigorous analysis showing performance enhancement, let alone enough to overcome the added drag of higher fees.
Congressional Republicans and moderate Democrats voted to overturn Biden’s assist to the ESG industry. This week, Biden vetoed it, relieving the Blackrocks and Vanguards of the world from any legal obligation to rigorously demonstrate that an upsell to ESG management would help retirees.
ESG funds often have a low return on investment. And as Bowyer observes, this can compromise asset managers’ fiduciary duty to maximize profit for their shareholders:
Historically, pension assets were required to be managed according to the principle of fiduciary obligations to retirees. This meant that pension administrators had one job, to look out for the financial benefits of the workers in the plan. Pensions were not designed to be alloyed with extraneous factors such as social justice or political causes. The legislation that enshrined this firmly into American pension law was passed in the 1970s and is called ERISA.
While Congressional Republicans and moderate Democrats agreed that asset management funds should serve American workers first, President Biden’s veto of their bipartisan legislation is a handout to special interests.
As Bowyer puts it:
Joe Biden’s constituents live in New York and work for Blackrock. Joe Manchin’s constituents live in West Virginia and work for black rocks, which they pull out of mines with backbreaking labor. They deserve as good a shot at a decent retirement as anyone else.
Read the full article here.