2017: Schweikert 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, Schweikert 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: Schweikert 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, Schweikert 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]