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House Passes Resolutions to Protect Retirement Savers


The House today passed two resolutions of disapproval (H. J. Res. 66 and H. J. Res. 67) to block misguided regulations that would force private-sector workers into government-run IRAs without the long-standing protections provided by the Employee Retirement Income Security Act (ERISA). Introduced by Rep. Tim Walberg (R-MI), chairman of the Subcommittee on Health, Employment, Labor, and Pensions, and Rep. Francis Rooney (R-FL), the resolutions would close a regulatory loophole created by the Obama administration and ensure retirement savers continue to receive important safeguards under federal law.
 
Following the vote, Chairman Walberg, Rep. Rooney, and House Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) issued the following statements:
 
“The regulatory loophole created by the Obama administration puts workers, retirees, and taxpayers at risk,” Chairman Walberg said. “These resolutions remove that risk and restore critical protections that are designed to safeguard the savings of hardworking men and women. This is an important part of our ongoing efforts to strengthen retirement security in this country and ensure every American has the tools and protections they need to retire with financial security and peace of mind.”
 
“Saving for retirement is already a challenge for far too many working families today,” Rep. Rooney said. “It’s unacceptable that the Obama administration provided a sweetheart deal for states and certain cities to circumvent long-standing protections for retirement savers that have been in place for decades. Together, these measures will uphold a bipartisan law and ensure retirees are able to enjoy the strong protections they need and deserve.”
 
“For decades, Congress has promised on a bipartisan basis to protect the retirement security of workers and their families, and with these resolutions, we are making good on that promise,” Chairwoman Foxx said. “I want to thank Representatives Walberg and Rooney for leading this important effort. Closing this regulatory loophole is a necessary and important step to ensure all workers and retirees enjoy strong protections for a secure retirement.”
 
BACKGROUND: For decades, there has been a uniform set of federal policies governing employer-provided retirement plans to ensure clear rules of the road for employers to follow and strong protections for America’s workers and retirees. However, in 2016, the Obama administration finalized regulations establishing a “safe harbor” from those long-standing rules and that would pave the way to government-run IRAs to be managed by states and certain municipalities. As a result, some employers would be forced to automatically enroll workers in government-run IRAs through payroll deductions. Unlike private-sector retirement plans, workers enrolled in these public-sector plans would not be afforded the important protections provided by ERISA. This misguided approach would lead to unintended consequences, including:
  • Fewer protections. Working families may have less information about the management of their plans and fewer consumer protections if their savings are mismanaged. 
      
  • Less control over retirement savings. Savers would have less control over their hard-earned dollars. Withdrawals or rolling-over investments to a private-sector account could be restricted or penalized. 
     
  • Fewer small business retirement plans. Small businesses may be discouraged from offering 401(k)s, and some may end their existing programs altogether, shifting their employees into government-run plans.
      
  • Confusing patchwork of rules. Workers would not receive the same benefits across state lines and employers would struggle to follow complex rules that vary across multiple cities and jurisdictions — even within one state.
      
  • Risk for taxpayers. It’s no secret that state and city pension plans are severely underfunded, with some reports estimating over $5 trillion in unfunded liabilities. If government-run IRAs are mismanaged, hardworking taxpayers may end up footing the bill to honor promises made by state and local governments.

Under the Congressional Review Act, Congress may pass a resolution of disapproval to prevent, with the full force of law, a federal agency from implementing a rule or issuing a rule that is substantially the same without congressional authorization. The resolution introduced by Chairman Walberg (H. J. Res. 66) would roll back the regulatory “safe harbor” created by the Obama administration that will result in private-sector workers being forced into government-run IRAs managed by states. Rep. Rooney’s resolution (H. J. Res. 67) would block a second regulation that extended the “safe harbor” to include cities and counties. Both resolutions would prevent a future administration from promulgating similar regulations.
 
For a copy of H. J. Res. 66, click here.
 
For a copy of H. J. Res. 67, click here.
 
A fact sheet on both resolutions is available here.

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