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1 1 (March 14, 2022)

handle is hein.amenin/aeiaehe0001 and id is 1 raw text is: AMERICAN
ENTERPRISE
~4'~~ INSmTUTE
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Statement Submitted for the Record
Committee on Education & Labor
U.S. House of Representatives
Hearing on Improving Retirement Security and
Access to Mental Health Benefits
March 1, 2022
Benjamin Zycher*
This statement is submitted for the record in the context of a hearing held March 1, 2022
by the Committee on Education & Labor, U.S. House of Representatives, on the topic of
Improving Retirement Security and Access to Mental Health Services. The statement contrasts
the rule proposed by the Employee Benefits Security Administration, U.S. Department of Labor,
Financial Factors in Selecting Plan Investments (hereinafter the Financial Factors rule), June
30, 2020, with the rule proposed by the same agency on October 14, 2021, Prudence and Loyalty
in Selecting Plan Investments and Exercising Shareholder Rights (hereinafter the Prudence and
Loyalty rule).2 The former was published in final form on November 13, 2020, and the latter is a
revision to that final rule.3 In summary, the revision would allow the introduction of
Environmental, Social, and Governance (ESG) and other non-pecuniary factors to influence the
investment choices made by fund managers with fiduciary responsibilities to fund participants as
defined in the Employee Retirement Income Security Act of 1974 (ERISA).4 This would introduce
an important political bias in the management of funds governed by ERISA fiduciary
requirements. This statement for the record is organized as follows:
Summary
I.   Introduction.
II.   Risk/Return and Other Benefits of the Financial Factors Rule.
III.  The Prudence and Loyalty Rule Tie Breaker Model of Non-Pecuniary Investment
Criteria is Sophistry.
Senior Fellow, American Enterprise Institute. The American Enterprise Institute (AEI) is a nonpartisan,
nonprofit, 501(c)(3) educational organization and does not take institutional positions on any issues. The views
expressed in this testimony are those of the author.
1 See hups:;edabor hogse ' /herifn s/mr:ingioxireirei  e itx:ih: bCe..: G ~men(a1eai s henefts.
2 See hups:!;ww wied i2reistE r.ov/docui kes/20e 5 10{14/2021 '22 r- dence1and(o'nse 4ing:21an:
inves  s -atets - Cd-xrcisi3  sbh are' hOder-i o  ts.
3 See htt s://www evdcera rsr.v/docmens/  {  2O/lf 1/13/2020.245 15/fi3 naia;-acttor -iselEctinpa  -
invesrt3 ts S.
4 On ERISA, see hTl s://w w.doL.}ov/gener al.pc/ rtiETEnT/ersa. See also Eugene Scalia, Retirees' Security
Trumps Other Social Goals, Wall Street Journal, June 23, 2020, at htt s://www.wsj'cor:ticlestirees-.scuri.Et
tramonts-other3- o:ial-;Toals-1592953329.

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