In the latest effort by the GOP to roll back Obama-era financial regulations, the Senate voted 50 to 49 to strike down an initiative designed to encourage states and cities to offer retirement savings plans to millions of workers.
The rule, which was created by the Department of Labor during the previous administration, was an attempt to urge states to help more workers start saving for retirement, CNN Money reports:
The rule was created by the Department of Labor under President Barack Obama to exempt state-run IRA plans from the Employee Retirement Income Security Act (ERISA), which sets standards for benefit plans established by an employer. But ERISA also presented obstacles for states to run their own plans.
CNN reports that the move by Republicans is likely to have “a chilling effect” on states considering such plans, “but won’t necessarily halt them.”
Opponents of state-run retirement plans say the programs “discourage small businesses from offering private retirement plans and have inadequate safeguards,” says the Associated Press.
Senate Majority Leader Mitch McConnell says that although 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.”
However, retiree and worker protection groups say the move by the GOP to roll back the retirement rule will hurt millions of small-business workers, NPR reports.
According to Cristina Martin Firvida, the AARP’s director of government affairs, many small businesses say it’s too expensive for them to set up retirement savings plans for their workers. Firvida tells NPR that that’s a big reason so many Americans aren’t putting away for their golden years.
“There are 55 million Americans who have no way to save for their retirement at work,” she explains.
Firvida says most workers sock away money for retirement when they’re enrolled in plans through their employer. If similar savings plans were available for employees of America’s small businesses, workers “would be 15 times more likely to save for retirement if they could do that straight out of their paycheck.”
It’s not known yet how rescinding the rule will impact states like California, Connecticut, Illinois, Maryland, New Jersey, Oregon and Washington — which have already adopted legislation to help small businesses in their states enroll workers in state-designed retirement savings plans. Meanwhile, several other states were also working on similar plans, says CNN Money.
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