Congress Poised To Stop State-Run Retirement Programs
ROBERT SIEGEL, HOST:
This week, the House of Representatives could vote to undo another set of Obama Administration regulations, this time about retirement savings. Most people don't save enough for retirement, and half of private employers don't provide retirement benefits, so some states set up plans to make it easier for workers to save.
Those retirement programs were helped along by those Obama-era regulations, but if the House gets rid of them, the state programs could be left in limbo. NPR's Ina Jaffe covers aging, and she filed this report.
INA JAFFE, BYLINE: The state-run retirement plans are all a little different, but they generally work something like this. Employers who don't offer retirement benefits would automatically send a small amount of each worker's paycheck to an IRA account supervised by the state. Employers contribute nothing, and workers can opt out if they want. California plans to start enrolling people in such a program next year. State Senate Leader Kevin de Leon, the author of California's retirement savings plan, says 7 million people will be eligible.
KEVIN DE LEON: We need to provide a modicum of dignity and respect for our senior citizens who will retire soon. And we should give them the respect that they deserve.
JAFFE: De Leon complains that Congress is using an obscure law to get rid of the regulations that provide legal protection to state-run IRAs. It's called the Congressional Review Act. If a regulation is relatively new, Congress can rescind it simply by passing a resolution of disapproval.
DE LEON: I'm really disheartened. I can't say I'm shocked because Wall Street has been gunning to undo these regulations for a very long time. And now with the Trump administration, they see their golden opportunity.
JAFFE: The members of Congress who sponsored the resolutions of disapproval weren't available for interviews. But they have argued that the state plans will discourage employers from offering retirement benefits and will give workers less control over their savings. The resolutions have the support of the trade group for the financial services industry. Lisa Bleier is managing director for the Securities Industry and Financial Markets Association.
LISA BLEIER: Part of our concern has to do with dealing with individual states - that each state is going to create a plan that's going to be different from the state next to it. And it's unclear what it will mean if an individual starts in one state and moves the assets to another state.
JAFFE: It's also unclear what the impact will be if Congress passes the resolutions of disapproval. John Scott is director of the retirement savings project at The Pew Charitable Trusts. He says the rules of Congress may get rid of are really just updates of regulations in place since the 1970s.
JOHN SCOTT: In the short term, it's likely these resolutions that have been introduced in Congress are likely to have a chilling effect on states that are thinking about this, perhaps not so much on the states that have already acted.
JAFFE: California's Senate leader, Kevin De Leon, says the state is going to enroll workers in the automatic IRA program as planned regardless of what happens in Congress this week.
DE LEON: 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.
JAFFE: Even if that means taking the fight to court. Ina Jaffe, NPR News. Transcript provided by NPR, Copyright NPR.