The new regulations would also make it possible for funds with environmental and other focuses to become the default investment option in retirement plans like 401(k)s, which the previous administration’s rules had prohibited. “If these legal concerns were keeping fiduciaries on the sidelines, it could mean worse outcomes for workers and retirees,” Mr. Walsh, the secretary of labor, said that the department consulted consumer groups, asset managers and others before writing the proposed rule, and that the change was considered necessary because the old one appeared to have a “chilling effect” on using environmental, social and governance factors - better known as E.S.G. In a reversal of a Trump-era policy, the Biden administration’s proposal makes clear that not only are retirement plan administrators permitted to consider such factors, it may be their duty to do so - particularly as the economic consequences of climate change continue to emerge. The Labor Department proposed rule changes on Wednesday that would make it easier for retirement plans to add investment options based on environmental and social considerations - and make it possible for such options to be the default setting upon enrollment.
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