Sun Sentinel Palm Beach Edition
Retirement plan blocked
States can’t launch programs to automatically enroll millions of people.
WASHINGTON — A pioneering effort to create retirement security for lowincome workers has been thrown into jeopardy after the Senate voted Wednesday to block states from launching programs to automatically enroll millions of people in IRA-type savings plans.
The measure, aimed at stopping the fledgling state retirement programs, now goes to President Donald Trump, who has vowed to sign it.
The Senate voted 50-49 to stop the state plans.
The retirement programs that were about to launch in seven states and are under consideration in many more were targeted by Wall Street firms and the U.S. Chamber of Commerce.
The vote reflected the renewed influence of the business lobby in Washington since the 2016 election, with lawmakers defying the 38-million member AARP, a vocal supporter of the auto-IRA program. The seniors group had warned senators that its members would hold them accountable for their votes.
“Nobody had a problem with this except for the big Wall Street companies who invented in their mind that they would be losing business to these state innovations,” said Sen. Chris Murphy, D-Conn..
But congressional Republicans said the state programs discourage small businesses from offering retirement plans and have inadequate safeguards.
While the state-run plans “might not seem too bad on the surface, what they really add up to is more government at the expense of the private sector and American workers,” said Senate Majority Leader Mitch McConnell, R-Ky.
The programs, known as Secure Choice in several states, generally require employers with no retirement plans to automatically invest a small percentage of each worker’s pay in a state-sponsored retirement account. Employers can opt out if they choose.
If the repeal measure is signed, states still will be able to set up retirement plans but must follow federal laws that protect the workers’ investments, McConnell said.
Under the programs, the money would be managed by private investment firms that partner with the states. The accounts are intended to help build financial security for some 55 million workers nationwide whose employers do not offer a retirement plan.
The push to implement the programs was delayed for years by complicated federal Labor Department rules governing such investment pools. In its final months, the Obama administration gave states the green light to pursue their vision. But Congress has now voted to revoke that authority, leaving the programs in limbo.
Reports by some bipartisan think tanks and policy analysts suggest the programs could ultimately save states billions of dollars by creating a measure of financial security for elderly Americans who otherwise end up on the rolls of Medicaid, food stamps and other safety-net programs.