Bill Overview
Title: Securing Employee Retirement Returns Act
Description: This bill revises the fiduciary duties for a retirement or employee benefit plan that is regulated under the Employee Retirement Income Security Act of 1974. The bill generally requires a fiduciary to select and maintain investments for a plan based solely on pecuniary factors. Under the bill, a pecuniary factor is a factor that is expected to have a material effect on the risk or return of an investment based on appropriate investment horizons that are consistent with the plan's investment objectives and funding policy. The bill allows a fiduciary to use nonpecuniary factors in certain circumstances, such as when a fiduciary (1) is unable to distinguish between investment alternatives on the basis of pecuniary factors alone, or (2) is selecting or maintaining investment alternatives for a defined contribution plan that permits a participant or beneficiary to choose from a broad range of investment alternatives.
Sponsors: Sen. Daines, Steve [R-MT]
Target Audience
Population: People in the U.S. under ERISA-regulated retirement or employee benefit plans
Estimated Size: 140000000
- The bill concerns retirement or employee benefit plans regulated under the Employee Retirement Income Security Act of 1974.
- The primary population affected includes individuals who are participants or beneficiaries of such retirement or employee benefit plans.
- ERISA-covered plans typically include private sector employer-sponsored retirement plans.
- These plans cover a broad range of individuals, including those employed in various sectors such as manufacturing, services, healthcare, and more within the private sector across the U.S.
- As ERISA is a U.S. law, the primary global impact is limited to the U.S.-based employees and employers under this jurisdiction.
Reasoning
- The primary target population includes employed individuals who participate in ERISA-regulated retirement plans in the private sector.
- Impact varies due to factors like age, income, type of employment, and awareness of retirement plan details.
- The policy could increase confidence in retirement investments, hence slightly increasing well-being for those who value financial stability highly.
- Younger participants or those with less engagement with their retirement plans might see negligible immediate impacts.
Simulated Interviews
Software Engineer (San Francisco, CA)
Age: 30 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- I like the idea of ensuring investments are chosen for their financial soundness, not other factors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Construction Worker (Dallas, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- I don't really look into the details of my retirement plan, but I guess it's better if they're handling it well.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 7 | 6 |
Marketing Specialist (Seattle, WA)
Age: 29 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This sounds like a good move to make sure my future savings grow.
- I'm still trying to figure out what all this means.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 8 |
Nurse (Chicago, IL)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- I feel a bit more at ease knowing that only sound investments will be considered.
- It's too late for risks now.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 9 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Retired (Miami, FL)
Age: 62 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- I hope the policy ensures my funds are in a safe place, but would it change much for me now?
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 5 | 5 |
Financial Analyst (Boston, MA)
Age: 36 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- While the policy sounds good, I personally consider additional factors like sustainability important too.
- Regulation could restrict some smart investment options.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Retail Manager (Phoenix, AZ)
Age: 41 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 9/20
Statement of Opinion:
- If this makes my retirement funds safer, I'm all for it, but I want some flexibility in my choices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Teacher (Portland, OR)
Age: 28 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- My retirement funds seem safe, but adding protection to that can't hurt.
- I trust the decisions that align with my long-term security.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Research Scientist (New York, NY)
Age: 39 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- I understand the need for financial soundness, but what about investments that fit my ethical values more?
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Sales Manager (Atlanta, GA)
Age: 34 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 9/20
Statement of Opinion:
- I aim for my portfolio to be robust against any mishaps, so I think this could bolster that.
- Ensuring my nest egg isn't at undue risk is key.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 9 |
Cost Estimates
Year 1: $50000000 (Low: $30000000, High: $80000000)
Year 2: $45000000 (Low: $25000000, High: $75000000)
Year 3: $40000000 (Low: $20000000, High: $70000000)
Year 5: $30000000 (Low: $10000000, High: $60000000)
Year 10: $20000000 (Low: $5000000, High: $50000000)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- Fiduciaries will require time and resources to transition to the new requirements, impacting initial compliance costs.
- Clarification on what constitutes pecuniary factors and nonpecuniary factors is crucial to avoid future investment disputes.
- The focus on pecuniary factors may limit some fiduciaries' flexibility in offering diverse investment options.