House Democrats called on President Barack Obama on Friday to require federal contractors to put their employees in retirement plans.
Auto-enrollment in that sector would help address the nearly half of U.S. workers who don't have access to a retirement program on the job, the lawmakers said.
They urged Mr. Obama to issue an executive order to put the policy in place, citing previous directives prohibiting federal contractors from discriminating against homosexuals and raising the minimum wage they must pay.
“Now, we hope you will use your pen to help provide retirement security to workers in federal contract jobs,” Rep. Joseph Crowley, D-N.Y., vice chair of the House Democratic Caucus,
wrote in the letter, which was signed by 65 other Democrats.
Targeting contractors would build on efforts in several states to expand retirement coverage by establishing state-run auto-IRAs and retirement-plan marketplaces, the lawmakers said.
“We believe having federal contractors auto-enroll all of their employees in retirement plans would further help remedy some of our nation's savings issues, and it could become a reality if you require them to do so through executive action,” the letter states.
The letter to Mr. Obama comes as congressional Democrats have
rallied around a recently finalized Labor Department regulation that would raise investment advice standards for retirement accounts.
The Financial Services Institute, which represents independent broker-dealers and financial advisers, has opposed both the DOL rule and several of the state-based retirement programs.
The trade association said it supports Mr. Crowley's effort to expand workplace savings, but differs with him on the way to do it.
“Unfortunately, the actions of this administration are pushing financial advice out of the reach of more and more Americans through the unworkable Department of Labor fiduciary rule, anti-competitive state-run retirement plans and other initiatives,” David Bellaire, FSI executive vice president and general counsel, said in a statement.
Another financial industry group said that the federal government should not insert itself into company-level retirement policy.
“Employers who know their workforce and its needs are best placed to decide whether to put part of workers' wage income into retirement plans,” Mike McNamee, spokesman for the Investment Company Institute, said in a statement. “Congress and the administration should focus on making it easier and less expensive for employers to do so.”
Contractors would not be required to set up their own retirement programs, under the executive order envisioned by the Democratic lawmakers. If a contractor does not offer a plan, it could use the federal
myRA program, a starter individual retirement account sponsored by the federal government.
The executive order should apply to both part-time and full-time workers, the letter states, and employees should be able immediately to vest in whatever plan is offered.
