Case studies in advocacy

As a leading provider of investment, advisory, and recordkeeping services for defined contribution retirement plans, Vanguard supports efforts to strengthen retirement security.

In the current Congress, we are actively engaged in supporting H.R. 2954, the Securing a Strong Retirement Act, in the House of Representatives, and its companion legislation S. 1770, the Retirement Savings and Security Act, in the Senate. Both bills would help increase retirement security. Among other provisions, they would: 

• Allow people to stay invested longer by raising the age for required minimum distributions to 75;

• Increase fairness among retirement plan participants by allowing 403(b) plans to invest in collective investment trusts (CITs);

• Expand automatic enrollment so that more workers will save for retirement; and

• Instruct the Department of Labor to update its regulations so that an investment in a plan that uses a mix of asset classes, such as a target-date fund, can be benchmarked against a blend of broad-based securities market indexes.

Introduced in 2021, these retirement security bills are in the early stages of the legislative process. We continue to work to build support and improve outcomes for investors.

We are committed to working with U.S. and global financial regulatory authorities and standard-setting bodies to strengthen the money market industry for the benefit and further protection of investors.

The economic shock of the onset of the COVID-19 pandemic in 2020 led to an unprecedented flight to liquidity and safety by investors and other market participants. Not surprisingly, government money market funds had significant inflows, as investors sought the principal preservation, stability, and safety that they offer. Prime money market funds experienced significant redemptions and the commercial paper market froze, which had ripple effects through the financial system.  

As a result of this volatility, Vanguard looked closely at its money market fund offerings and in August 2020 announced that Vanguard Prime Money Market Fund would be reorganized into a government money market fund. We recognized that retail investors need safety and stability when selecting money market investments and the change in investment strategy would enable the fund to continue to meet investors’ expectations while providing a competitive yield over the long term. 

We have recommended structural reforms for money market funds to both the Securities and Exchange Commission (SEC) and the Financial Stability Board (FSB). Our recommendations include:

• Establishing a floating net asset valuation for all (retail and institutional) prime money market funds;

• Eliminating fees and gates, as these tools trigger rather than reduce redemptions; and

• Establishing market structure reforms that improve how the underlying fixed income market functions in a crisis.

Vanguard was instrumental in modernizing the default delivery method for retirement plan notices from paper to electronic delivery (e-delivery) while preserving the right of investors to receive paper documents if they prefer. E-delivery provides for more environmentally friendly, effective, and efficient disclosure than paper documents and retains investor safeguards. More than three-quarters of Vanguard defined contribution plan participants at the time were registered for online access, and nearly 90% of our interactions with participants occurred online. Vanguard’s data show that e-delivery leads to lower costs, increased engagement through a tailored online experience, and, ultimately, stronger investment outcomes across all age ranges.

Our policy team supported a bipartisan coalition of lawmakers in the House and Senate who led this effort. Vanguard also wrote a comment letter to the U.S. Department of Labor (DOL) advocating a proposed rule to change the policy, which helped set the stage for success. In July 2020, final updated DOL guidelines went into effect, permitting retirement plan administrators to make e-delivery the default method for required notices and disclosures.  

Vanguard is also routinely invited to participate on policymaker panels and on various market policy advisory committees. In the United States, these include the Treasury Borrowing Authority Committee and the Commodity Futures Trading Commission Market Risk Advisory Committee. These efforts help keep policymakers informed about how markets are working, encourage the sharing of ideas and the development of industry standards, and promote best practices.

Vanguard maintains a federal political action committee (PAC), the Vanguard Committee for Responsible Government (VCRG), which is funded solely by voluntary contributions from eligible company employees. The VCRG is used to support federal candidates on a bipartisan basis, consistent with Vanguard’s giving guidelines and our mission to take a stand for all investors and give them the best chance for investment success. VCRG’s activities are subject to federal regulation, and all contributions are reported to the Federal Election Commission and are available online here. Vanguard does not use corporate funds to contribute to federal, state, or local candidates, political parties, or political committees.