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The Department of Labor is just piling on at this point. In a major new regulatory proposal, DOL is pursuing the laudable goal of helping Americans save for retirement, but is going about it the wrong way: By telling Americans what kind of relationship they can and cannot have with their personal investment advisors. And here’s the kicker, in an Oscar worthy performance for how to create unintended consequences -- DOL's proposal would actually make it harder for small businesses to offer retirement benefits to employees and would limit small business employees’ ability to save for retirement.
In a new report released Tuesday, the U.S. Chamber has found that small business owners provide roughly $472 billion in retirement savings for more than 9 million U.S. households through SEP and SIMPLE-type IRA plans. But under the DOL’s proposed rules, the number of IRA options and investment advisor options available to small businesses will shrink dramatically, making it much harder for employers to do the right thing for employees. According to the DOL’s own estimates, lack of access to investment advice costs savers about $100 billion per year in preventable investment mistakes. These new rules will make it even harder for many American savers to get the guidance they need.
Ultimately, DOL’s proposal would make small businesses less competitive — which can’t be good for anybody.
Consider these two facts:
- Small businesses are the lifeblood of the American economy, making up 99% of all U.S. employers.
- Job growth is vitally dependent on small businesses, which account for 63% of new private sector jobs.
Despite everything we know about how to create jobs and economic growth, policymakers in Washington have continued to make it harder for small businesses to thrive. On Monday, former Democratic Congressman Travis Childers wrote in Roll Call about the burden these businesses are bearing:
“For small businesses, one of the largest expenses covers regulatory compliance costs. …Whether it’s difficulty accessing credit or difficulty shouldering a barrage of new administration regulations, small businesses have not realized the growth enjoyed by their bigger competitors. In turn, they aren’t able to contribute fully to an even more expansive economy.”
The Chamber released this new report as it hosts the annual America’s Small Business Summit this week in Washington, D.C., in recognition of the vital contribution small businesses make to our way of life. While DOL’s motives aren’t in question, its competence as a financial regulator and its ability to regulate $15 trillion in retirement savings are matters for concern. Let’s at least try to keep DOL from shooting us in the foot.