By Benjamin Goad - 05/14/14 04:21 PM EDT
Many employers would cease offering matching contributions to retirement plans, or stop offering the benefit altogether, under forthcoming Obama administration regulations, a new business-backed survey has concluded.
The Labor Department has worked for years on the “fiduciary rule,” which is intended to keep investment advisers from profiting at the expense of their clients’ retirement funds.
The draft regulations were pulled back three years ago amid intense criticism from the financial sector, which claims brokers would be saddled with unnecessary restrictions that make it harder for them to work with the average investor’s Individual Retirement Account (IRA).
The Labor Department is expected to propose a revamped version of the rule soon, but business groups remain wary.
A poll conducted for the United States Hispanic Chamber of Commerce indicates that the rule’s impact could go beyond investment advisers.
The survey of more than 600 “retirement-plan decision-makers” at businesses with up to 500 employees serves as evidence that the rule would “only impede the ability of small firms to offer their employees retirement-plan accounts, thus hindering American workers from saving for a reliable future,” said Javier Palomarez, the group's president.
The rule is expected to bar retirement plan providers and the advisers who sell retirement plans from assisting employers in the selection and monitoring of funds in their retirement plans, according to the chamber.
That would force employers to perform the duties themselves, pay a third party firm to do it or simply stop offering plans.
The survey, conducted by the marketing and research firm Greenwald & Associates, found that almost 30 percent of small businesses would probably take the latter course.
Nearly half of the firms surveyed said they would likely reduce matching contributions, according to the poll.
The survey serves as fresh fodder for criticism for finance industry groups who oppose the rule. One of them, the Securities Industry and Financial Markets Association, issued a statement alter Wednesday.
“While the [Labor Department's] actions are well-intended, the reality is that the outcome of its proposal will likely do more harm than good at a time when Americans cannot afford to lose a single dime of their future savings,” the group said.