New federal restrictions, according to a business organization, could harm small businesses that offer retirement plans and reduce employee pension savings.
The group is encouraging members of New York’s congressional delegation to reject the requirements.
Concerns Over SEC’s Proposed Mutual Fund Rule Changes
The Business Council of the State of New York wrote to the delegation stating that the proposed rule changes by the Securities and Exchange Commission regarding swing pricing and liquidity risk management programs for open-end mutual funds would result in higher costs and lower returns for retirement savings for New Yorkers.
The business group claimed that the proposed SEC regulations would fundamentally alter the landscape for liquidity risk management since they would specifically compel open-end funds to adopt “swing pricing” and enforce a “hard close” requirement.
Paul Zuber, the organization’s executive vice president, wrote to lawmakers that participants in employer-sponsored retirement plans would lose access to advantageous investment techniques and would see a decline in the returns on their mutual fund holdings.
The market for leveraged loans, which offers a key source of finance for US businesses, might also be eliminated by the proposed revisions.
The business group cited a recent US Chamber of Commerce report that claimed that the SEC’s proposed changes to mutual funds would significantly harm participants in retirement plans. According to the report, open-end mutual funds account for 81.3% of other private defined contribution plans and 61.7% of all 401(k) plan assets.
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SEC’s Proposed Changes: Impact on Retirement Savings
According to the chamber’s analysis, the mandated swing pricing with a hard closing will only have a somewhat negative impact on retirement savings for the average American over a 26-year period, eroding them by $53,342.
Concerns regarding the effects of the suggested adjustments have been voiced by members of Congress.
The hard closure rule proposal will hurt retirement investors, according to a letter delivered to SEC Chairman Gary Gensler in March by the Republican-controlled House Financial Services Subcommittee on Capital Markets.
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