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Labor puts weight behind Maryland retirement initiative

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Add Maryland to the list of states actively looking to sponsor retirement plans for private sector workers.

Today, at a press conference attended by Labor Secretary Thomas Perez, leaders in that state’s legislature announced the formation of the Commission on Maryland Retirement Security and Savings.

Perez’s presence underscored the Obama Administration’s intent to facilitate state-administered retirement plans that automatically enroll employees in the private sector when they don’t have access to a workplace plan.

“This is the wave of the future,” said Perez at the press conference, predicting that within the next five years as many as 20 states will have adopted such plans, according to reporting on BaltimoreSun.com.

In early September, the DOL sent proposed rules to the Office of Management and Budget that would make it easier for states to mandate enrollment in retirement plans.

That development came after President Obama instructed Labor to issue such guidance in July, during the White House’s Conference on Aging.

Around 20 states have proposals in the pipeline that would require businesses with as few as five employees to enroll workers in state-administered savings plans.

State legislatures in Illinois, Oregon, and Washington have already passed their own bills.

At the Conference on Aging, President Obama noted that all of his budget proposals have included a federal mandate for retirement plan enrollment, but each year Congress has failed to follow his lead.

In a subsequent blog post, Perez indicated that Congress’ failure to act meant the responsibility to create comprehensive savings access should fall to the states.

“If the federal government can’t move the needle, then we have to do everything possible to encourage innovation that’s already happening at the state level,” he wrote.

Concerns over how or whether plans sponsored at the state level would comply with the Employee Retirement Income Security Act have reportedly slowed initiatives at the state level.

Perez has pledged to create a rule at the federal level that will clarify state plans’ responsibilities to ERISA in paving the way for mandatory enrollment.

In Maryland, 1 million private sector workers are without access to retirement savings plans.

At today’s press conference, Maryland’s legislative leaders announced the formation of a 19-member commission of state elected officials and members of the private sector that is tasked with developing the way forward for mandatory enrollment in Maryland.

Former Pension Benefit Guaranty Corp. director Josh Gotbaum was named a member of the commission.

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