Northwest labor press., March 17, 2017, Page 2, Image 2

PAGE 2 | March 17 , 2017 | NORTHWEST LABOR PRESS
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Republicans in Congress try to sabotage state-sponsored
retirement savings plans — before they begin
By Don McIntosh
Hardly anyone knows about
them yet, but a batch of state-
sponsored retirement savings
plans is about to make it easier
for millions of American work-
ers to save for retirement. Re-
publicans in Congress are trying
to stop that from happening.
The plans are in the process
of being set up in Oregon, Illi-
nois, California, Connecticut
and Maryland. It’s a union idea,
passed by state legislatures with
union support, as a way to help
mostly nonunion workers
whose employers don’t offer
any retirement plan. The way
the plans work, the state sets up
a retirement savings fund, to be
invested in a simple, diversified
portfolio by low-fee managers,
and then requires employers
who don’t otherwise offer a re-
tirement savings plan to enroll
their employees. Employees
contribute a certain percentage
of gross pay into the fund, up to
the IRA maximum of $5,500 a
year. The balances grow, and
can be accessed for retirement,
essentially like a Roth IRA. If
workers don’t want to con-
tribute the mandated amount,
they can reduce their contribu-
tion, or opt out entirely.
Who would object to such
plans? High-fee investment ad-
visers, it turns out, and anti-
worker business groups like the
U.S. Chamber of Commerce.
Never mind states’ rights; oppo-
nents think they’ve found a
backdoor way to stop the plans
from going forward. It has to do
with whether the plans run afoul
of ERISA, a 1973 federal law
that protects workers from hav-
ing their retirement savings
stolen or improperly invested by
employers. At the request of
states setting up the new savings
plans, last year the Employee
Benefits Security Administra-
tion of the U.S. Department of
Labor issued a ruling making it
clear that these new plans are
not employer-sponsored retire-
ment plans that would fall under
ERISA. The state plans aren’t
set up or controlled by employ-
ers, so employers should have
no fiduciary responsibility for
them under ERISA.
But under the 1996 Congres-
sional Review Act, a new Con-
gress can override federal regu-
lations that finalized less than 60
legislative days before the old
Congress adjourned (in this
case, any since June 13, 2016.)
HJR 66, a bill to overturn the
Labor Department rule, passed
the U.S. House Feb. 15 on a
party line 231-193 vote, with
only one Democrat in favor, and
only three Republicans against.
Oregon Republican Greg
Walden voted in favor of the
legislation, which could result in
legal headaches for Oregon’s
new retirement savings plan.
Walden’s office did not return a
call from the Labor Press seek-
ing an explanation of his vote.
The bill is now before the
U.S. Senate Finance Committee
as SJR 32, sponsored by chair
Orrin Hatch (R-Utah).
“We have millions of people
approaching their retirement
years without adequate savings,
and some pretty simple state
plans that are just going to help
people save for retirement are be-
ing threatened by this rollback,”
said SEIU Oregon State Council
Executive Director Matt Swan-
son, who helped pass the Oregon
plan. “It’s nothing more than a
big giveback to Wall Street.”
If the resolution passes the
Senate and is signed by Presi-
dent Donald Trump, it could
stall the plans in several states
where legislation specifically re-
lied on the Labor Department
ruling. But Oregon’s plan will
go forward regardless, Oregon
Treasury spokesperson James
Sinks told the Labor Press. An
appointed board has been work-
ing on setting up the Oregon
plan since legislation passed in
2015. Retired Iron Workers Lo-
cal 29 business manager Kevin
Jensen was labor’s voice on the
board through January, and
United Food and Commercial
Workers Local 555 President
Dan Clay will replace him this
month. (See Page 6.)
Oregon’s plan will phase in,
starting with a voluntary pilot
group of employers on July 1,
expanding to employers with 10
or more workers in 2018, and to
all employers in 2019. At that
point, as many as 800,000 Ore-
gon workers would have access
to the program, with the default
savings rate set at 5 percent.
FIND OUT MORE
http://www.oregon.gov/retire