Following similar measures in the House, Senate Finance Committee Chairman Orrin Hatch, R-Utah, introduced two resolutions Monday, S.J.Res. 32 and S.J.Res. 33, to undo Obama administration rules designed to help states develop payroll deduction IRA plans that don’t run afoul of the Employee Retirement Income Security Act.
Hatch argued that the regulations, as proposed, “break over 42 years of precedent and allow states to forgo protecting the savings of employees in the private sector and instead encourage states to require businesses to enroll employees in state-run plans.”
The House approved two resolutions of disapproval (H. J. Res. 66 and H. J. Res. 67) on Feb. 16 to block 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.
“These rules are yet another example of the previous administration’s preference for government solutions to every problem and its affinity for overregulation and bureaucratic red tape,” Hatch said in a statement. “These proposed regulations encourage more mandates on job creators and promote locking American workers in risky state-run plans. Rolling the regulations back will give employees and small-business owners more flexibility and freedom to choose how to financially invest and build a nest egg for retirement.”
Hatch stated that bipartisan, voluntary solutions exist “that would address retirement coverage issues for private businesses and their employees that do not rely on government mandates or government-run plans.”
Recent research by Pew’s retirement savings program, which has not supported or opposed state efforts to enact auto-IRA plans championed by the Obama-era rules, can help inform the debate, noted John Scott, director, Retirement Savings for The Pew Charitable Trusts.
Pew recently published results from a survey of more than 1,600 small and medium-sized businesses to better understand the effect that auto-IRA programs might have on the retirement plan market and affected employers.
The analysis, according to Scott, shows that auto-IRA plans “likely would not reduce existing employer-provided retirement benefits. Eighty-seven percent of executives from small businesses that have plans said they would keep current offerings if presented with a state auto-IRA alternative,” while “51% of those without plans said they would start their own instead of joining their state’s.”
Said Scott: “Creation of state-sponsored retirement savings programs then might have the overall effect of nudging employers that do not currently offer traditional retirement benefits toward doing so.”
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