The Senate nullified state-run retirement plans by a razor-thin 50-49 vote late Wednesday via a resolution of disapproval under the Congressional Review Act.
Groups who had fought the plans applauded Senate passage of H.J. Res. 66, which invalidated the Department of Labor’s “safe harbor” regulations on savings arrangements established by states for non-governmental employees.
The House passed the legislation, introduced by Rep. Tim Walberg, R-Mich., on Feb. 15.
Sen. Orrin Hatch, R-Utah, introduced companion legislation S.J. Res. 32. A similar resolution signed into law by President Donald Trump in April revoked city-run plans.
Cathy Weatherford, president and CEO of the Insured Retirement Institute, said in a statement that IRI has “continually advocated for common-sense, bipartisan policies which would expand access to retirement savings accounts and automatic saving features.” However, DOL’s rule “would not have achieved this objective. The Senate has preserved the high level of ERISA protections workers receive when they participate in workplace retirement savings plans and will not exempt those participating in state-mandated savings plans.”
The U.S. Chamber of Commerce stated that it was “pleased to see the Senate take action to overturn DOL’s misguided rule exempting state government-sponsored retirement plans from basic investor protections.”
The rule “was sold as a way to expand small-business retirement plan options – but it would have instead trapped employees of small businesses into a bad option. We urge the president to sign this legislation swiftly so we can all get to work on pending bipartisan proposals to expand retirement options for small businesses,” stated Neil Bradley, senior vice president and chief policy officer for the Chamber.
The Investment Company Institute also applauded passage of the measure, stating that it would continue to work with Congress “to advance national solutions to expand plan coverage, such as making available open multiple employer plans (open MEPs) and simpler plans with less burdensome administrative requirements.”
But lawmakers were quick to deride the Senate action. “We strongly urge the president to veto the bill …, which would show he really did mean it when he said he understood the plight of the American worker,” stated Senate Minority Leader Chuck Schumer, D-NY, and Nancy Pelosi, D-Calif. “If President Trump vetoes this misguided bill, Democrats in Congress will stand by him and ensure the veto is sustained.”
Sen. Chris Van Hollen, D-Md., stated that “it’s unbelievable that President Trump and Republicans would choose to turn back” the progress made to help states set up IRA programs for those who would not otherwise be able to save for their retirements. “It flies in the face of the GOP’s claim to care about personal responsibility and states’ rights.”
Van Hollen has joined other senators to introduce the Preserve Rights of States and Political Subdivisions to Encourage Retirements Savings (PROSPERS) Act, which would make Labor’s regulation permanent.
Maryland is one of five states that developed a bipartisan program to make it easier for residents to save for retirement.
— Check out Beyond DOL Fiduciary Rule: 4 Key Retirement Policy Areas to Watch on ThinkAdvisor.