2017: Fitzpatrick Voted To Disapprove A Rule That Allowed The Creation
Of Retirement Plans Administered By States For Low Income, Private
Sector Workers Where Their Employer Does Not Offer A Retirement Plan.
In February 2017, Fitzpatrick voted for disapproving a rule that allows
states to create retirement accounts designed for low income workers.
"This resolution disapproves the rule issued by the Labor Department on
Aug. 30, 2016, which exempts state-administered retirement plans for
workers at private sector businesses and nonprofit entities from certain
restrictions and requirements under the federal Employee Retirement
Income Security Act of 1974 (ERISA; PL 93-406). The measure provides
that the rule (formally known as the Savings Arrangements Established by
States for Non-Governmental Employees Rule) will have no force or
effect." The vote was on the resolution. The House agreed to the
legislation by a vote of 231 to 193. The Senate later passed the
resolution and President Trump signed it into law. [House Vote 96,
2/15/17; Congressional
Quarterly, 2/10/17;
Congressional Actions, H. J. Res.
66]
The Rule Allowed States To Create Retirement Plans For Low Income,
Private Sector Workers Where Their Employer Does Not Offer A
Retirement Plan. According to The Hill, "One of the first
high-stakes battles testing the relationship between states and
President Donald Trump's administration will hit the House floor
Wednesday, as Republicans seek to roll back an Obama-era rule that
would allow states to create retirement savings accounts for
low-income workers. The House will vote on a resolution offered by
Health, Employment, Labor and Pensions Subcommittee Chairman Tim
Walberg (R-Mich.) that would roll back a rule allowing states to
create retirement plans for private-sector workers whose employers
do not offer retirement plans on their own." [The Hill,
2/15/17]
Seven States Have Or Are Creating Plans. According to The Hill,
"California created the first such state-run retirement system in
2012 and six other states --- Illinois, Connecticut, New Jersey,
Maryland, Oregon and Washington --- have taken steps of their own.
Oregon plans to begin its program later this year." [The Hill,
2/15/17]
California Created A System Where Employees Had A Percentage Of
Their Paycheck Deducted; The Investment Was Managed By A
Professional, Not Directly By The State. According to a New York
Times Editorial, "In California, for example, participating
employees would have a small percentage of pay deducted from their
paychecks, unless they opted out. Those amounts would be pooled and
managed by investment professionals chosen by the state in a bidding
process; the plan would be overseen by a board of government and
business leaders appointed by the governor and the Legislature.
First, under the plans, states establish the legal framework for
deducting contributions from employees' paychecks, but they do not
run the plans. Second, state plans do not compete unfairly because
mutual funds and other financial firms have not competed for the
small-business market where employees without retirement coverage
tend to work. If they had, tens of millions of Americans would not
be without coverage, and the state plans probably wouldn't be
needed." [New York Times,
2/14/17]
About Half Of Private Sector Employees Do Not Have An Employer
Provided Retirement Plan. According to a New York Times Editorial,
"There is no overstating how unprepared Americans are to retire.
Nearly half of private-sector employees --- some 55 million people
--- do not have an employer-provided retirement plan. Most of them
are low- to middle-income earners who will end up relying on Social
Security for between half and all of their income in retirement."
[New York Times,
2/14/17]
The Rule Is Opposed By Financial Firms In Part Because State Plans
Are Transparent About Their Fees, While 401(K) And Other Plans Are
"Are Infamous For Hidden Fees, Excessive Costs And Needless
Complexity." According to a New York Times Editorial, "So why do
financial firms object? One reason may be that, by law, state plans
are transparent about their fees and operations. In contrast, 401(k)
plans and other retirement options are infamous for hidden fees,
excessive costs and needless complexity. The industry has taken a
lot of flak from policy makers and investor advocates for those high
costs, and comparisons with state-based plans will only intensify
the unwanted scrutiny." [New York Times,
2/14/17]
The Chamber Of Commerce And Financial Firms Also Oppose The Rule
Because They Believe That Employers Will Stop Offering Retirement
Plans. According to The Hill, "But the U.S. Chamber of Commerce
and several financial firms oppose such state-run retirement plans.
The Chamber has said state plans will give employers an excuse to
end better 401(k) programs for employees. 'Our nation faces
difficult retirement challenges, but more government isn't the
solution,' Walberg said in a statement. Rep. Francis Rooney
(R-Fla.), who sponsored another resolution disapproving of the rule,
called it a 'last-minute regulatory loophole' that 'will lead to
harmful consequences for both workers and employers.'" [The Hill,
2/15/17]
2017: Fitzpatrick Voted To Disapprove A Rule That Created Retirement
Plans Administered By Local Governments For Low Income, Private Sector
Workers Where Their Employer Does Not Offer A Retirement Plan. In
February 2017, Fitzpatrick voted for disapproving a rule that allows
local governments to create retirement accounts designed for low income
workers. "This resolution disapproves the rule issued by the Labor
Department on Dec. 20, 2016, that exempts local government-administered
retirement plans for workers at private sector businesses and nonprofit
entities from certain restrictions and requirements under the federal
Employee Retirement Income Security Act of 1974 (ERISA; PL 93-406). The
measure provides that the rule (formally known as the Savings
Arrangements Established by Qualified State Political Subdivisions for
Non-Governmental Employees Rule) will have no force or effect." The vote
was on the resolution. The House agreed to the legislation by a vote of
234 to 191. The legislation later became law. [House Vote 95,
2/15/17; Congressional
Quarterly, 2/10/17;
Congressional Actions, H. J. Res.
67]