State-Level Republicans Criticize Federal Vote to Kill Retirement Account Rule

In Social Security and Retirement On

WASHINGTON — An idea to make it easier for Americans to save for retirement that was introduced at the conservative Heritage Foundation is in the cross hairs of a conservative Republican Congress.

The publicly stated reason for killing a rule that allowed states to automatically enroll employees of small businesses in savings accounts: federal jurisdiction. But critics contend it was a case of conservatives being cowed by the financial services industry.

The Senate this week approved by a single vote a bill rolling back an Obama-era Labor Department rule that lets states automatically enroll small-business employees in retirement savings accounts. Overshadowed by the health care vote in the House, the bill was a source of high drama on Capitol Hill, with Vice President Mike Pence ready to cast a tiebreaking vote if it became necessary.

The vote echoed the 50-49 decision in March that rolled back a parallel Labor Department order giving cities similar permission. The twin Labor Department rules were a framework that encouraged cities and states to work around the often expensive and cumbersome conditions in the Employee Retirement Income Security Act (Erisa).

In contrast to their usual opposition to regulations, Republicans were the group defending these federal guidelines. Before the vote this week, Senator Mitch McConnell of Kentucky, the majority leader, said the state rule “undermines a private retirement savings system that millions of Americans have counted on for decades.”

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