The U.S. Senate passed H.J. Res 66, a joint resolution to reject a Department of Labor (DOL) rule for government-run and mandated IRA plans at the state level – also known as the auto-IRA rule.
The rule, established during the Obama Administration, allows states and municipalities to establish auto enrollment, payroll-deduction plans for private sector employees of companies that do not offer 401(k) plans. The rule exempts, under certain conditions, the auto-IRAs from the Employee Retirement Income Security Act (ERISA), a federal law that sets minimum standards for retirement plans in private industry.
The Financial Services Roundtable (FSR) applauded the Senate for passing H.J. Res 66.
“Today’s action in the Senate is the final step to rejecting government-run and mandated IRA plans that are held to weaker consumer protections,” Jill Hoffman, FSR’s vice president of government affairs for investment management, said. “Expanding workplace coverage is a critically important goal and a sentiment we share, but it shouldn’t be done outside of the protections afforded by the [ERISA].”
FSR supports the creation of open multiple employer plans to expand workplace coverage.
The Securities Industry and Financial Markets Association (SIFMA) also backed the Senate’s action.
“The DOL’s regulation could leave workers saving for retirement without important protections including survivors benefits, spousal benefits, children’s benefits and inter-state portability. Under this guidance, states could have created plans that restrict options and limit plan customizability while prohibiting an employer match, which is crucial to maximizing retirement savings,” Lisa Bleier, SIFMA managing director and associate general counsel, said.
While more must be done to encourage Americans to save for retirement, Bleier said exempting state plans from providing protections for workers is not the solution. We urge the President to sign this resolution without delay.”
President Trump has already signed H.J. Res 67, a similar bill that applies to municipalities, as opposed to states.