Since Donald Trump and the Republican-majority Congress arrived in Washington last month, the job of undoing legislation aimed at protecting the American workforce, retirement plan investors and the public generally, has been in full force.
Both the Dodd Frank Act, passed in 2010 to prevent a repeat of the global financial crisis, and the Department of Labor’s fiduciary rule, issued last April to prevent conflicts of interest that benefit financial advisers selling retirement products, are in jeopardy of being rolled back by Congress. Now a third regulation, meant to aid in states’ efforts to create more retirement savers in the private sector workforce, is under the gun, with Rep. Tim Walberg (R-MI) and Francis Rooney (R-FL) seeking to kill a safe harbor loophole created by the DoL in the final months of the Obama administration.
The DoL published a final rule in August that in effect makes it easier for any of the 50 states to create their own, state-run retirement savings program without triggering a conflict with the omnibus pension regulation known as Erisa. Walberg and Rooney, who introduced two resolutions of disapproval to block the regulatory loophole, argue that workers who are opted into a state retirement plan by their employers will be hurt as they’re “forced into government-run IRAs with less financial security and few safeguards,” according to a statement Wednesday by the Education and the Workforce Committee.
“That’s an alternative fact,” says Hank Kim, executive director of NCPERS and the father of the original secure choice retirement plan for private sector workers without access to a workplace plan. “Working families would be helped by a retirement plan that is accessible and simply administered by their employers.” States like California, Illinois, Oregon, Maryland and Connecticut have passed legislation to establish retirement savings programs for private-sector workers who until now, had no access to a workplace retirement plan. These states are seeking to reduce the “silver tsunami” of elder poverty in low and moderate income workers who are not served by the public sector.
“If this rule is struck down, it will take away the freedom of the states to address a serious retirement problem that affects millions of workers,” says Angela Antonelli, research professor and executive director of the Center for Retirement Initiatives (CRI) at Georgetown University’s McCourt School of Public Policy.