WASHINGTON – Senate Finance Committee chairman Orrin Hatch, R-Utah, has introduced a pair of joint resolutions aimed at killing state and local retirement savings plans for private workers who have no access to such plans.
These savings plans are designed to minimize financial burdens on states and localities from private, non-governmental workers who have no access to retirement savings.
The two resolutions Hatch introduced Monday – S. J. Res. 32 and S. J. Res. 33 – are similar to two joint resolutions (H.J. Res. 66 and H.J. Res. 67) approved in the House last month.
The resolutions would overturn Labor Department rules adopted last August and December to facilitate these plans by assuring states and localities that offer them that they would not be covered by ERISA rules designed to cover private retirement plans.
"These rules are yet another example of the previous administration's preference for government solutions to every problem and its affinity for over-regulation and bureaucratic red tape," Hatch said in a release. He added that the rules "encourage more mandates on job creators and promote locking American workers in risky state-run plans."
But the National Conference of State Legislatures estimates that 55 million Americans work for employers that do not offer any form of retirement savings plans. State and local governments worry that when these workers retire without savings, they will become burdens to state and local governments and their social, welfare and health care programs.
Since 2012, 30 states and localities have begun either considering these plans, weighing legislation to authorize them, or have enacted laws and are in the process of implementing them.
Five of the states -- California, Connecticut, Oregon, Illinois and Maryland – have enacted legislation that would allow them to automatically enroll private workers into individual retirement accounts (IRAs). Workers, however, could opt out of the plans or change the level of their contributions.
California was the first to study the idea, Illinois was the first to enact a program, and Oregon may be the first to enroll workers in a program later this year, according to John Scott, director of retirement savings at Pew Charitable Trusts.
Two other states – Washington and New Jersey – want to set up websites that serve as voluntary marketplaces where private workers can comparison shop for retirement plans or IRAs. These two states would merely provide information about retirement options run by others.
An eighth state, Massachusetts, has enacted legislation to offer some sort of standardized retirement plan for small nonprofits within its jurisdiction. Its plan would fall under ERISA rules.
As far as localities' involvement, both Philadelphia and New York City have been considering savings plans for private workers.
With the exception of California, it is unclear whether states will proceed with these plans if Congress overturns the Labor Department laws. California's Senate leader Kevin De Leon told National Public Radio last month that his state is going to enroll workers in its automatic IRA program as planned no matter what Congress does to the Labor laws.
"We're not looking for a fight, but we will do everything within our power to protect the economic prosperity, the values and the people of California," he to NPR's Ina Jaffe last month.
But some states are not as far along with their programs. "People may rethink it or not," said Scott. "It's hard to say. It's very murky."
