The Senate has moved to kill Obama-era retirement rules governing so-called auto-IRAs for states and cities, following similar action taken up in the House of Representatives in recent weeks.
Sen. Orrin Hatch, R-Utah, introduced two separate resolutions on Monday, one aiming to block a Department of Labor rule governing automatic-enrollment, payroll-deduction programs established by states, and the other governing those in municipalities such as cities.
The rules, issued in the second half of last year, are meant to promote creation of such auto-IRA programs for private-sector workers not currently covered by a workplace retirement plan such as a 401(k).
The rules aim to shore up U.S. retirement savings, by laying out a way for the programs to be exempt from federal retirement rules, The Employee Retirement Income Security Act of 1974, which would create more liability for states and cities.
The resolutions introduced by Sen. Hatch, S.J. Res. 32 and S.J. Res. 33, seek to overturn the state and city rules, respectively. The House passed similar measures Feb. 15, following introduction earlier in the month by Rep. Tim Walberg, R-Mich., and Rep. Francis Rooney, R-Fla.
"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," said Sen. Hatch, chairman of the Senate Finance Committee.
The state and city regulations fall within the time frame for repeal under the Congressional Review Act, which makes rules issued in the waning days of the Obama administration vulnerable. Passage only requires a simple majority vote by Republicans, and isn't subject to a filibuster in the Senate.
Proponents of the DOL rules say they're needed to help increase U.S. retirement savings through the workplace, especially among small employers, which are less likely to offer a retirement plan to their employees.
Five states — California, Maryland, Connecticut, Illinois and Oregon — have passed legislation to create auto-IRA programs. Cities such as New York, Philadelphia and Seattle are considering similar measures.
Opponents say such programs will create a patchwork of retirement programs across the country and will lead to less investor protection. They also take issue with a mandate within the rules for employers to offer a retirement plan to employees, whether the state-run auto-IRA or a private-sector option, preferring a voluntary option instead.