YOUR Woke 401(k)

What’s the difference between Trump and Biden?  One put individuals first, making each person responsible for their own decisions  - the other puts the government’s agenda ahead of the desires and well being of the individual.  

How much of our lives is being quietly taken over by the state that we don’t know about yet?  How can we take our money and our lives back?  What part of “private property” don’t these greedy, controlling politicians and bureaucrats understand? 

Your New Woke 401(k) 

The Editorial BoardOct. 20, 2021 

Wall Street Journal 

An important Trump Labor rule last fall reinforced that the Employee Retirement Income Security Act (Erisa) requires retirement plan fiduciaries to act “solely in the interest” of participants. The rule prevented pension plans and asset managers from considering ESG factors like climate, workforce diversity and political donations unless they had a “material effect on the return and risk of an investment.” The rule effectively barred plans from placing workers who don’t select a 401(k) fund option into a default ESG fund.

The Biden DOL plans to scrap the Trump rule while putting retirement sponsors and asset managers on notice that they have a fiduciary duty to include ESG in investment decisions. The proposed rule “makes clear that climate change and other ESG factors are often material” and thus in many instances should be considered “in the assessment of investment risks and returns.”

A fiduciary’s duty may “often require an evaluation of the effect of climate change and/or government policy changes” such as electric vehicle mandates on an investment, the rule-making says. Retirement plan sponsors won’t merely be allowed to prioritize climate and social factors in how they invest. They could be sued if they don’t. Workers won’t get much say because plans won’t be required “to solicit preferences” on ESG. 

The Biden DOL claims that ESG factors yield higher returns. “Many compelling studies show the material financial benefits of diverse and inclusive workplaces,” DOL writes. But it also acknowledges that “findings vary,” and theoretical ESG benefits don’t necessarily translate into better financial performance.

Asset managers like BlackRock are pushing to create ESG 401(k) funds in part because they can charge higher fees. According to Morningstar, the asset-weighted average expense ratio of U.S. “sustainable” funds was 0.61% in 2020 compared to 0.41% for all open-ended mutual and exchange-traded funds and 0.12% for passive funds. This difference can reduce retirement savings by tens of thousands of dollars over a few decades. 

The Biden rule would let plan sponsors enroll workers in ESG 401(k) funds as the default, so workers could unknowingly end up paying higher fees. It also threatens retirement plan sponsors with legal liability if they don’t support progressive shareholder resolutions, such as those requiring companies to reduce CO2 emissions or disclose political donations.

All of this amounts to a backdoor rewrite of Erisa, one of the better laws of the last 50 years. Progressives are moving across the Biden Administration to steer private capital to implement an agenda they can’t pass through Congress. Your savings will be conscripted to advance the progressive agenda, whether you like it or not.