Time to Close Wall Street’s ‘Retirement Advice Loophole’

Alliance for Retired Americans photo

There is a loophole in the rules that govern Wall Street brokers and financial firms that provide retirement investment advice that can drain away thousands, or even tens of thousands, of dollars of hard-earned savings from a single retirement account. Today, a coalition of senior, union and consumer groups launched a new website—SaveOurRetirement.org—to mobilize support to close the “Retirement Advice Loophole” through a new rule the U.S. Department of Labor is trying to adopt.

The way workers save for retirement has changed dramatically over the past decades. With the decline in traditional pensions, more and more workers depend on 401(k) plans and individual retirement accounts (IRAs), and they frequently seek investment advice from financial professionals. But the rule governing when that advice must be solely in the worker’s interest, free from conflicts of interest, has not been changed since 1975—and many loopholes exist.

The “Retirement Advice Loophole“ allows Wall Street brokers and financial firms with major conflicts of interest to provide investment advice that serves their own interests instead of what’s best for their clients.

For example, they can sell financial products that pay large commissions but hurt their clients with unnecessary fees, poor returns or excessive risks. Millions of Americans are affected by this loophole every year without even knowing it, and it is draining away their retirement savings.

Right now, some advisers are required to put their customers’ interests first while others are not—and it is often extremely difficult for workers and retirees to know which type of adviser they are dealing with.

The Labor Department rule has been under development for some time but has not been released yet. However, it is expected to require that investment advisers have no conflict of interest that might, for example, cause them to steer their clients toward investments that earn the adviser high fees but might not be in the client’s best interest. The rule should require anyone who gives retirement investment advice to act solely in their client’s best interest—a common sense standard known as the fiduciary duty.

Of course, Wall Street and the financial industry are adamantly opposed to reforming the rules. Two years ago they lobbied hard for a House bill aimed at derailing any new Labor Department investment advice rule, and surely they will be spending big money to do the same thing in 2015.

Be sure to visit SaveOurRetirement.org to learn more and find out how you can help close the “Retirement Advice Loophole.”

The groups in the coalition are the AFL-CIO, AFSCME, AARP, Americans for Financial Reform, Better Markets, Consumer Federation of America and the Pension Rights Center.

Reposted from AFL-CIO NOW

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Workonomics: Congressman Finds Living on Food Stamps No SNAP

The average food stamp recipient receives about $31 a week ($4.42 a day) for groceries and that’s apparently too much for House Republicans—who by the way earn about $3,350 a week plus perks and seem to work about three days a week for maybe 40 weeks of the year. But I digress.

This week the House passed a farm bill that, for the first time 40 years, does not include funds for food stamps. Their reasoning, as flawed as it is, is that the program known as the Supplemental Nutrition Assistance Program (SNAP) is far too generous and far too big and needs to be cut by at least 20%. Maybe they should try to do what their colleague Rep. Peter DeFazio (D-Ore.) recently did—just see how far that $30 stretches and then live on it for a week.

In this latest Workonomics installment for Upworthy, DeFazio, hits the checkout line with a meager basket of low-cost bulk basics, but few fruits and veggies and healthful protein choices.

Says DeFazio:

20% of them [food stamp recipients] are seniors, half of them are kids and the majority of the rest are working for low wages. I sure don’t begrudge them the little bit of help they’re getting.…There are lots of things I think members of Congress should have to do to be more in touch with reality. This would be one of them.

These Workonomic stories in the Upworthy series are brought to you by the AFL-CIO. The series is designed to lift up shareable content about labor unions, America’s workers and the need for collective action to make real change around wages, paid sick days, economic inequality and workers’ rights.

Upworthy is the fastest-growing media company in the world, according to Business Insider, and its site sees 11 million visitors per month. In fact, 60% of U.S. Facebook users have a friend who likes Upworthy. People of all ages spend a lot of time on social networks, so Workonomics is geared to meet people where they live online.

Check out Workonomics and spread the word by sharing the content you enjoy on Facebook and Twitter.

Reposted from AFL-CIO NOW

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Affordable Care Act Saves Seniors $2.1 Billion in Drug Costs

by Mike Hall – Reposted from the AFL-CIO NOW Blog

The Affordable Care Act has saved nearly 3.6 million people enrolled in Medicare $2.1 billion on their prescription drugs in 2011, finds a new report by the U.S. Department of Health and Human Services (HHS). HHS Secretary Kathleen Sebelius says the health care reform law signed by President Obama in 2010:

is already saving money for millions of Americans with Medicare. As we move forward, we will close the donut hole completely and save even more money for everyone with Medicare.

The Affordable Care Act—which Republican lawmakers are fighting to repeal—provides a 50 percent discount on brand-name prescription drugs and, beginning this year, a 14 percent discount on generics. Last year, it provided a 7 percent discount on covered generic medications for people who hit the prescription drug coverage gap known as the donut hole, with more than 2.8 million beneficiaries receiving $32.1 million in savings on generics.

Overall, the 3.6 million Americans who hit the donut hole saved an average of $604 on the cost of their prescription drugs. The Affordable Care Act closes the donut hole completely by 2020.

Click here for a state-by-state look at donut hole savings figures for today’s donut and herefor a fact sheet.

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The “nursing home”

by Arthur Benson—Pennsylvania

I came to the door of a soon-to-be-member and met an elderly couple. They were bedding in a cluttered living room with most necessities at arm’s length. The husband informed me that they were ineligible for any form of government assistance due to bureaucratic red-tape. He was in good humor and described their situation as their “nursing home.” He confided in me his concern for their welfare and being unable to provide transportation for his wife’s doctor’s appointments. He is afraid he might fall while assisting her to his car.

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Fighting the good fight

by Jeulia Russell—Ohio

I knocked on a senior’s door. She was a nice older woman. I told her who I was and with and what we were doing–fighting to lower the costs of health care.

She told me she had never had health insurance until she was 65 years old, and she said it was hard because she’s on a fixed income. I assured her that what we’re fighting for was going to pay off and she became a dues-paying member and she brightened my day and my confidence.

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Struggling in retirement

by Travis Blake—Pennsylvania

While signing up members in South Whithall, PA, I came to the house of a lady who is retired and disabled. She needs a wheelchair and walker just to get around the house. She also has an autistic child she takes care of. She is struggling to pay her own health care bills, as well as struggling to do all she can for her autistic child.

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No money, no medicine

by Jackie Lima—Pennsylvania

I met a 96 year old woman tonight. She invited me into her home and we began discussing health care. She had good reason for signing up as a member of Working America. Her son was denied his medication at their small town pharmacy because he owed too much money. In fact, there was a note on her table to that end. The woman expressed how hard it is to see her children suffering and vowed to sneak down to the pharmacy and pay her son’s bill. I told her if we had national health care, this wouldn’t be an issue—that her son would have his medications. Instantly, a look of relief filled her eyes. “That is why I’m out here,” I said. She gave me some fruit and sent me on my way.

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Nursing “care”?

by Jackie Lima—Pennsylvania

The woman I spoke to tonight worked in a nursing home. Apparently, the home was purchased by firms from other states. One elderly client, who still held his own “power of attorney” had an outstanding bill with the nursing home. He was relegated to “hospice status,” but bounced back after responding to medication. He has Alzheimer’s Disease and dementia, but because he owed the nursing home money, he was weeded out and sent to a local hospital with inpatient hospice service. The employee of the nursing home that I spoke with is concerned that he will be over-medicated, not receive the care he needs and be left, possibly to die, all because of an inability to pay.

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Generous even in hard times

by Donald Pettyjohn—Ohio

On my ninth day of canvassing in Dayton for Working America, I met a woman with an interesting and inspiring story. She was in her late fifties and raising her ten-year-old grandson, whose mother and father didn’t want anything to do with him. She didn’t want to see the boy sent to a foster home and so took custody of him. She explained that she had a medical problem consisting of a mass building up inside of her and didn’t know what exactly it was, except that it causes her a lot of pain. She also said that she had so many medical bills from her past problems that now she couldn’t possibly pay them with what she was receiving on social security. As such, she felt she couldn’t go to the doctor to find out what was wrong with her on her $450/month from social security. A few months ago, her social security had been raised to $520/month, but as a result her food stamp allowance had been reduced to $23/month. As she started crying, she told me that her rent was $325/month and that she could barely afford food and utilities.

She said between sobs that she couldn’t pay any dues but said she would make phone calls for Working America, put together fliers or even follow canvassers around with something cold to drink. I thanked her for her generosity and willingness to help despite her situation and she told me, “No, thank you for coming out each day trying to help better the lives of people like me.” I gave her a big hug and assured her that things will get better and she smiled.

As I left, I couldn’t help but think about what we do and the impact it has on peoples’ lives. And I know in my heart that coming to Working America was one of the best decisions I’ve ever made. If we don’t stand up and fight for these people, no one will.

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Big box insurance leaves sick man in debt

by Maranda Stebbins—Missouri

I met an elderly man last night who was enjoying the fresh air through his screen door. He invited me to step inside because it was difficult for him to move around. As I began my rap, he started to look at me a bit suspiciously. After I handed him my clipboard and the pen, he asked me if I thought this would do any good. Of course I said I absolutely thought so—that it was the very reason we do this work. He told me he was no Spring chicken, and that he had seen how things go in this country, and told me it is only getting worse.

He shared with me that he is a cancer patient on social security, and his monthly charges for health care keep rising. Additionally he has one prescription that costs him over $100 every month. He then told me that he still has debt from the first round of chemotherapy treatments, when he was insured through his wife through her job at a major retailer. Under the insurance plan he racked up over $12,000 for chemo, and $24,000 for surgery. We all know that kind of money to someone with a retail paycheck is—to say the least—a lot.

This man was skeptical of Working America at first, but as he went on with his story and personal political opinions, it was obvious to me that he was very passionate about the issues that we fight for. When I left, he had not only signed on as a dues-paying member, but also expressed interest in getting more involved.

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