Stakeholders in the $23-plus trillion retirement market have had an eventful 2016.

We hope all may ring in the New Year with passion and joy. However, a little self-control may be advisable on New Year's Eve, as we will all be expected to hit the ground running come January 2nd — especially in the retirement industry where change is coming on fast.

Here is what you can expect to happen in the first weeks.

Recommended For You

Puzder confirmation hearing set, Dems sharpening knives

 

President-elect Trump's Labor nomination, Andrew Puzder, can expect two things from his confirmation hearing.

Andrew Puzder and President-elect Trump (Photo: AP)

One will be his ultimate confirmation. The second will be the fire from Democrats he'll have to endure before he gets it.

Politico is reporting the Chairman of the Senate Health, Education, Labor and Pensions Committee, Lamar Alexander, R-TN, has scheduled a hearing for January 12th.

A majority of the Republican-controlled committee will have to move Puzder's nomination to a full Senate vote, where a simple majority will certify him as the next Labor Secretary.

Upon news of his nomination, the ranking member of the HELP committee, Sen. Patty Murray, D-WA, said, "I am deeply concerned by Mr. Puzder's record of standing in the way of progress on issues that would make an immediate difference in the lives of working families, in particular raising the minimum wage and ensuring equal pay for equal work. And I have serious questions about whether a CEO who is comfortable reinforcing harmful stereotypes about women and who is so dismissive of workplace discrimination issues can be trusted to uphold core missions of the department."

Puzder, the CEO of CKE Restaurants, which owns Hardees and Car's Jr. fast food chains, has been an outspoken critic of the call to raise the federal minimum wage to $15 an hour.

Puzder is the CEO of a fast-food corporation. (Photo: AP)

He also opposed the Obama administration's Labor Department rule that would have doubled the annual earnings overtime threshold, which would make millions of Americans classified as management eligible for overtime pay. A Texas federal court has stayed the rule.

Murray's reference to "harmful stereotypes" about women suggests Democrats will pull no punches. Progressive advocates have been critical of the Carl's Jr. and Hardees national ad campaigns that feature attractive women eating hamburgers in sexually suggestive ways.

Puzder defended the ads in a 2011 press release. "I like our ads. I like beautiful women eating burgers in bikinis. I think it's very American."

Last week, Sen. Murray expounded upon Democrats' contempt for the selection of Puzder to lead Labor.

In an interview with Bloomberg BNA, she said, "By nearly every measure, Andrew Puzder appears to be a uniquely unqualified choice, and stands against the very mission of the department he's been selected to lead."

Workers deserve a Secretary of Labor that prioritizes wage increases over corporate profits, said Murray. "I fully expect a very vigorous and thorough confirmation hearing," she added.

Labor unions and advocacy groups are reportedly supporting the effort to make the confirmation hearing as painful as possible for the restaurant maven. One advocacy group has begun interviewing employees at CKE Restaurant franchises to document alleged labor infractions, data that Democrats can be expected to drop in Mr. Puzder's lap with the cameras rolling.

That may not be the worst of it.

Along with Sen. Murray, Puzder will have to survive interrogations from Sen. Elizabeth Warren, D-MA, and Sen. Bernie Sanders, I-VT, both members of the HELP Committee.

Who will lead EBSA?

 

Mr. Puzder's confirmation hearing is likely to provide the Trump administration's first on-the-record assessment of Labor's fiduciary rule, assuming one is not made before the hearing.

EBSA head Phyllis Borzi will be gone; who will fill her shoes? (Photo: AP)

The rule's fate remains up in the air. If the new administration takes a position against the rule, experts say the path of least resistance will be to delay the rule's April 10, 2017 implementation date.

One theory is that the administration's ultimate stance will be impacted by whoever is nominated to lead the Employee Benefits Security Administration, the arm of Labor that wrote and will enforce the rule.

That person will have to be nominated by Trump and confirmed by the Senate. Along with the next Assistant Labor Secretary, the Senate will have to confirm more than 1,200 other agency heads and senior posts in the Trump administration.

Texas ruling could come in first week of New Year

 

The most comprehensive legal challenge to Labor's fiduciary rule is being considered in the Northern District of Texas.

A coalition of industry interest groups, led by the U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association is challenging the legality of the rule on eight counts, including one that claims the rule breaches the First Amendment of the Constitution.

Federal courts in Kansas and the District of Columbia have ruled in favor of the Labor Department. Opponents of the rule are in desperate need of a legal victory—but perhaps less so if the Trump administration decides to delay the implementation of the rule in an effort to ultimately dismantle it.

A decision from Texas is expected any day.

Will Chevron's victory in a 401(k) lawsuit slow the plaintiffs' bar?

 

In 2016, the plaintiffs' bar broke an unofficial speed record.

2016 saw lawsuits against sponsors of 401(k) plans and the trend will continue. (Photo: iStock)

The rate at which sponsors of 401(k) plans were sued under the Employee Retirement Income Security Act was too fast to track.

In August, a class-action suit against Chevron Corp.'s $19 billion plan was dismissed in the Northern District of California.

Plaintiffs alleged Chevron plan fiduciaries cost participants tens of millions in investment losses by offering a low-yielding money market fund, retail-class shares of mutual funds, and an allegedly expensive small cap mutual fund. The plaintiffs also alleged asset-based recordkeeping fees paid to Vanguard were too high.

The court found insufficient facts to support those claims. The claim that fiduciaries failed their obligations under ERISA by not offering the cheapest share classes assumes "that the mere inclusion of a fund with an expense ratio that is higher than the lowest share class violates the duty of prudence," wrote Judge Phyllis Hamilton in her decision.

The claims in White et. al v. Chevron Corp. closely resemble those in scores of other claims against large plan sponsors.

The decision could serve to inform other courts, but suits in other circuits will not be beholden to Judge Hamilton's interpretation of ERISA.

Furthermore, the decision is likely to be appealed. Last week the plaintiffs filed a "statement of decision," which was followed by a response from Chevron. That procedural tactic is said to be a prerequisite to the appeals process.

Congress may address retirement policy in next budget deal

 

Senate Democrats nearly shut down the government over the Miners Protection Act, which directs federal funds to the health and retirement benefits of 120,000 retired coal miners.

Coal miners' health care and pensions were threatened. (Photo: AP)

They ultimately agreed to a temporary solution during the debate over the continuing resolution that closed out the 114th Congress. But they promised to make the issue a top priority after the 115th Congress in sworn in on January 3, 2017.

The Miners Act passed out of the Senate Finance Committee last September, along with the Retirement Enhancement and Savings Act of 2016.

The latter bill passed unanimously. It would facilitate the creation of open multiple employer plans among small businesses, and create a new annuity selection safe harbor for sponsors of 401(k) plans, among other things.

The core measures are supported across the political spectrum. Perhaps the Republicans and Democrats will throw the American people a bipartisan bone as the two sides gird for battle over the ACA, taxes, and immigration.

The bill would likely sail through on its own. Or it could be used by either side as a bargaining chip as lawmakers hammer out the 2017 budget.

NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.