McRae: Stop the ideological embezzling of retirement accounts
By Treasurer David McRae
If you’ve read my column before, you’ve likely heard me talk about the importance of maxing out any match your employer offers when it comes to your 401(k). I’ve given many reasons for this: Social Security simply won’t be enough to pay all your retirement bills, it’s essentially free money from your employer, and compound interest will make your contribution today worth more tomorrow. While it is still a smart financial decision to make those contributions, I have some increasing concerns about federal policies that could impact the rate at which those contributions can grow.
It’s important to know that employer-sponsored plans, most notably 401(k)’s, are regulated through the Employee Retirement Income Security Act (or ERISA). This legislation established minimum standards and safeguards for how these plans can be managed.
Under the Trump-Pence administration, the U.S. government made moves to further protect retirees, explaining that retirement fund managers could not engage in investments that would have a negative impact on retirees’ savings or expose them to additional risks. But under the Biden administration, those rules have been pushed to the side.
In fact, on Nov. 22, 2022, the Biden administration explicitly undermined the safeguards by issuing a new rule that would make it easier for fund managers to imperil retirees’ savings. More specifically, they opened the door for fund managers to prioritize risky “Environmental, Social, and Governance” (ESG) policies over your retirement account growth.
What is an ESG policy? It is a precarious investment practice that has emerged in recent decades. Rather than putting the financial well being of retirees first, ESG advances woke ideological goals, such as anti-fossil fuel energy policies, limitations on Mississippi’s timber and agricultural industries, and liberal social constructs.
I believe people should have the ability to invest their money in the causes they care about, but that is not exactly what’s happening here. Instead, a distant financial manager is pushing their own political agenda – regardless of retirees’ financial goals.
Not only is this politically inappropriate, it is also financially irresponsible. According to research from the University of Chicago, mutual funds scoring highly on ESG factors are constantly outperformed by funds rated lowest for ESG.
For these reasons, I recently joined more than 100 organizations and former Vice President Mike Pence in calling every member of Congress to stop Biden’s ideological embezzling of Americans’ retirement accounts and reject his dangerous ESG rule. I am proud to report that both Mississippi Senators, Roger Wicker and Cindy Hyde-Smith, have supported legislation to stop the rule, and I am grateful for their leadership in this area.
Congress must act quickly. We cannot jeopardize Mississippians’ hard-earned retirement accounts.
Mississippi Treasurer David McRae is the 55th Treasurer for the State of Mississippi. In this role, he helps manage the state’s cash flow, oversees College Savings Mississippi, and has returned nearly $65 million in unclaimed money to Mississippians. For more information, visit Treasury.MS.gov.