The House late Wednesday passed two resolutions to block Obama administration regulations designed to help states develop payroll deduction IRA plans that don’t run afoul of the Employee Retirement Income Security Act.
The resolutions of disapproval blocked what GOP lawmakers called “misguided” Obama-era rules finalized last August that would have “forced” some employers to automatically enroll workers in government-run IRAs through payroll deductions.
Introduced by Rep. Tim Walberg, R-Mich., chairman of the Subcommittee on Health, Employment, Labor and Pensions, and Rep. Francis Rooney, R-Fla., the resolutions would close what the lawmakers say is a regulatory loophole created by the Obama administration and ensure retirement savers continue to receive important safeguards under federal law.
Two resolutions against safe harbors for state-run retirement plans and retirement plans sponsored by qualified municipalities were introduced this week.
The lawmakers argued that unlike private-sector retirement plans, workers enrolled in these public-sector plans “would not be afforded the important protections” provided by ERISA.
“The regulatory loophole created by the Obama administration puts workers, retirees and taxpayers at risk,” Walberg said. “These resolutions remove that risk and restore critical protections that are designed to safeguard the savings of hardworking men and women. This is an important part of our ongoing efforts to strengthen retirement security in this country and ensure every American has the tools and protections they need to retire with financial security and peace of mind.”
H. J. Res. 66 would roll back the regulatory “safe harbor” created by the Obama administration that would have resulted in private-sector workers being placed in government-run IRAs managed by states. H. J. Res. 67 would block a second regulation that extended the “safe harbor” to include cities and counties. Both resolutions would prevent a future administration from promulgating similar regulations.
The lawmakers argued the rules would lead to “unintended” consequences, such as fewer small-business retirement plans, as well as a confusing patchwork of state rules.
The Investment Company Institute, a trade group for mutual funds, applauded House passage of the resolutions and urged the Senate “to follow suit, to ensure that these untested retirement programs are required to follow the same consumer protections that have governed employer-sponsored plans for the past 40 years.”
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