Vice President Joe Biden on Friday proposed new rules to help protect workers' retirement savings as part of a broader government effort to bolster the finances of middle class voters.
With President Barack Obama's popularity ratings down in a congressional election year, his administration has sought to focus more on middle-class voters' concerns about high unemployment, the ailing economy and their troubled finances.
Biden, who heads a year-old panel assigned to improve middle-class living standards, announced new Labor Department regulations on workers' retirement savings at an event to release the annual report of his middle-class task force.
The new safeguards, which the White House says will affect tens of millions of workers, are aimed at protecting employees and their 401(k) and IRA retirement savings plans from financial advisers' potential conflicts of interest.
Retirement investment advisers and money managers would only be allowed to give advice if they did not get any commission for steering workers into funds with which they are affiliated, or if their advice was based on a computer model certified to be unbiased by independent experts.
"Some kinds of investments are more profitable for financial institutions than others, but those investments may not be the best ones for workers," the White House said in a briefing document on the proposed rule changes.
"As a result, if investment advisers get a commission or other compensation for steering workers into investment options with high fees and expenses, they face conflicts of interest that can undermine the reliability of their advice. Expert advice can be helpful, but that advice must be unbiased and there must be no risk that the adviser will benefit from steering workers to particular investments," Deputy Labor Secretary Seth Harris said at the event.
Harris said the administration was also proposing a new rule to protect the retirement savings of workers covered by collective bargaining agreements.
"This rule will require that if any of these workers or their unions ask for information about the health of the plans, the plan administrator must provide that information," Harris said.
Biden called the initiatives an important step to help the middle class, which he said was "nowhere near as strong as it needs to be."
Over a year into his presidency, Obama has taken a more populist turn in his rhetoric, pledging to fight for the middle class and taking a tougher line toward Wall Street.
He is trying to halt an erosion of support among middle-class Americans who helped sweep him into office and whose backing is needed to prevent his Democratic Party from suffering major losses in the November congressional elections.
The Labor Department will make the proposed regulations available for public comment until May 5, after which it will issue a final rule.
Once that rule takes effect, the regulations will apply to all financial institutions that both provide investment options like 401(k) plans to employers and offer financial advice to their employees.
