Oregon will press on with its efforts to provide retirement plans to private-sector employees who lack those benefits at work, despite pending legislation from Congress.
In a 50-49 vote, the U.S. Senate on Wednesday repealed Labor Department rules from the Obama administration that would have made it easier for states to offer retirement plans for workers who who don’t have them. The House previously approved similar legislation.
Five states — California, Connecticut, Illinois, Maryland and Oregon — already have approved programs that would automatically enroll workers without employer-sponsored retirement plans into individual retirement accounts.
Oregon “will continue to move forward with our pilot program that is launching on July 1 this year. The need to address the oncoming retirement crisis is too great,” said Oregon Treasurer Tobias Read in a statement.
Trade groups from the financial services industry supported the measure while consumer advocates worried that it will be harder to help the roughly 55 million employees who don’t have access to a workplace retirement plan.
“[The bill] does significant harm to a common-sense bipartisan solution that creates private investment vehicles to help middle-class families save through a simple payroll deduction,” said Nancy LeaMond, executive vice president of AARP, which advocates for older Americans, in a statement.
The financial services industry had opposed the Obama-era rules because they feared that state-run retirement plans would have unfair advantages when competing with plans from the private sector.
“While we agree that more must be done to encourage Americans to save for retirement, exempting state plans from providing important protections for workers is not the solution. This resolution ensures that retirement savers have the same high-level protections and options available to workers under private plans,” said Lisa Bleier, managing director and associate general counsel of SIFMA, which lobbies for the financial services industry, in a statement.
“I think we’ll see states test the waters on how far they can go.”
Lawmakers in 30 states have considered providing government-run retirement plans to private-sector workers.
The AARP estimates that 15 million workers could be covered by new workplace savings options in these five states and plans to lobby for these programs. Through its research, the AARP found that people are 15 times more likely to save if they can do so directly out of their paychecks.
However, legal questions remain for what happens to Oregon’s plan and other state-run retirement savings initiatives.
“I think we’ll see states test the waters on how far they can go,” said Will Hansen, senior vice president of retirement policy at the ERISA Industry Committee, which advocates for large employers who sponsor retirement plans. “States that haven’t passed legislation will wait and see what states that have passed legislation will do.”
Congress had previously passed a law eliminating legal protections for cities to create similar retirement plans for private-sector workers.
The measure passed on Wednesday awaits the president’s signature, who is expected to sign it.
Update: This story has been updated with reaction from Oregon state officials.