27 Jul 2020 Pension Protection Particularly Helps Black Americans
A new rule proposed by the Trump Administration would require that “[f]inancial managers must maximize pension beneficiaries’ returns; they may not imperil those returns by investing on any other basis.”
Most people probably thought that this was already the professional duty of their investment advisors and pension fund managers. But there’s been a lot of market activity lately based less on profit and more on politicized environment, social and governance (ESG) goals. The new U.S. Department of Labor rule is important because it is aimed at “prevent[ing] financially risky advocacy for a social justice agenda on someone else’s dime.”
As Project 21 Co-Chairman Council Nedd II points out in a commentary for Issues & Insights, this will be particularly helpful for the black community.
Project 21 and the National Center’s Free Enterprise Project have submitted separate public comments to the Federal Register supporting the proposed rule. Nedd’s commentary is largely taken from Project 21’s comment.
The Labor Department’s proposed rule applies to the work of private pension funds – something that Council calls a “best bet for black retirement security.” Unfortunately, “too many black Americans are financially unprepared to retire,” he says. For one thing, blacks have been called “bad savers” – some of this coming from “economic conditions, distrust of institutions and an overall lack of planning.”
That is why this rule is of vital importance, especially to black Americans:
[A]ny impediment to their ability to build retirement security that is identified and yet still allowed to continue unabated is a disservice to black lives.
That’s why the Trump Administration’s proposed rule clarifying the “investment duties” of certain pension plan managers matters. It addresses a clear and present financial danger in which too many fund managers are making investment decisions for the purpose of broader social justice goals rather than giving beneficiaries the best possible return on their investment.
This is specifically important to blacks since:
- 54% of black Americans are unprepared for retirement.
- 54% of black Americans have access to private, employer-supported retirement programs.
- Black Americans comprise a larger segment of unionized labor, and thus may qualify for pensions.
This is also important because “these pension plans may be the only guaranteed income available for their retirement outside of Social Security – of which full benefits are currently projected to run out there within the next 17 years.”
“But pensions can only help if they have proper stewardship,” Council concludes. “That’s the aim of the new Trump Administration rule.”
To read all of Council’s commentary – “Trump Pension Rule Will Benefit Black Americans” – at the Issues & Insights website, click here.