Lobbyists Sue First State-Run Retirement Savings Plan
The country’s first state-sponsored retirement savings plan, designed to help workers whose employers don’t offer a plan, is facing a legal challenge, The Wall Street Journal writes.
The Erisa Industry Committee, which represents large firms on employee-benefits policies, has filed a lawsuit against OregonSaves, a program Oregon implemented in July that will require companies without workplace retirement savings plans to automatically enroll their employees in state-run individual retirement accounts, according to the paper.
By Nov. 15, companies with 100 or more workers are expected to register with the program, and by 2020 all employers that fall under the requirement must participate.
The suit, filed last week in the U.S. District Court for the District of Oregon, alleges states aren’t allowed to require reporting on retirement plans because those plans are already covered by the Employee Retirement Income Security Act of 1974, the Journal writes. The trade group wants the courts to freeze the requirement pending a decision or kill it entirely, Annette Guarisco Fildes, president and chief executive of the group, tells the paper.
The Erisa Industry Committee is concerned that several other states plan to follow in Oregon’s footsteps and roll out their own state-sponsored retirement plans — which could lead to “a patchwork of different and conflicting state regulatory requirements in addition to federal law,” according to the suit cited by the Journal.
Similarly, a number of auto-IRA initiatives are underway in eight other states — with California and Illinois expected to roll theirs out in 2018, the paper writes. As of May, at least 20 states had introduced bills to consider state-run automatic IRA programs.
Supporters of state-run retirement plans point to the 42% of private-sector employees without workplace plans, many of whom aren’t saving for retirement, according to the paper. Lawmakers, meanwhile, believe state-run retirement savings programs are a way to cut back on public assistance programs such as Medicaid, the Journal writes.
Opponents, which include company owners, the U.S. Chamber of Commerce and a trade group for small businesses, slam the state-run auto-IRA initiatives on the grounds that they would put undue burdens on employers and push some firms to kill their 401(k) offerings, according to the paper.