Two bills that would require the Department of Labor to get the approval of Congress before adopting new fiduciary rules for retirement plans passed a House committee Tuesday.
The bills now move to the powerful House Ways and Means Committee, which is expected to act Wednesday, according to a spokesman for Rep. Peter Roskam from Illinois, sponsor of one of the bills.
The House Education and the Workforce Committee voted to release the bills from committee. The bills, sponsored by Roskam and Rep. Phil Roe of Tennessee, both Republicans, had bipartisan support when they were introduced. However, the vote Tuesday was along party lines, with Democrats voting against it.
Under the bills, if the Department of Labor does not obtain congressional approval for its new fiduciary rule, an alternate rule proposed by Congress would be enacted.
The DOL has been debating for months about a proposal for a fiduciary rule for brokers and advisors who advise on 401(k) and retirement plans. The proposal would require advisors to act in the best interests of their clients and would make fees more transparent.
Opponents of the measure say it is too complex and would increase costs for advisors and therefore for consumers. They also say the DOL rule would limit access to retirement advice and hurt small businesses.
Education and the Workforce Committee Chairman John Kline, Republican of Minnesota, said, “The Department of Labor is pursuing a reckless regulatory scheme that will make it harder for low- and middle-income families to save for retirement. That’s the last thing our country needs.”
The proposed bills are a “solution that will strengthen protections for retirement savers and ensure robust access to affordable retirement advice. It achieves the same goal as the Department of Labor’s proposal, but in a way that doesn’t hurt small businesses and working families,” he added.
Those favoring the DOL proposal say the changes are needed to protect consumers from retirement advisors who do not act in their best interests.
Rep. Bobby Scott, a Democrat from Virginia who voted against the bills Tuesday even though he has reservations about the DOL proposal, said, “The department is simply working to ensure that Americans—particularly those who have saved throughout their career and are now preparing for retirement—are guaranteed to receive advice that’s in their best interest.