Nicole Rice

State-run retirement programs may be in danger

By Nicole Rice, Policy Director, Government Relations

Capitol Update, May 5, 2017

Whether states can continue with the development and implementation of government-run retirement savings programs for private-sector employees has become more uncertain. Last week, the United States Senate voted to roll back the Obama-era U.S. Department of Labor (USDOL) “safe harbor” that provided guidance on the creation of these arrangements for non-governmental employees.

The U.S. Senate joined the congressional lower House in approving House Joint Resolution 66 (HJR 66) on Wednesday to disapprove the rule submitted by the USDOL. It was a razor thin vote of 50-49. The resolution now goes to the President for signature.

Will this blow be fatal to California’s Secure Choice Retirement Savings Program? Not according to California Democrat leaders who have vowed to succeed where the federal government has failed. Senator Kevin De León (D-Los Angeles), President pro Tempore of the California Senate and author of the Secure Choice program encapsulated in SB 1234 Chapter 804, Statutes of 2016) declared in a statement released immediately after the vote that, California will not be deterred … We will continue to implement and defend our Secure Choice Retirement savings program so Californians who have worked hard all their lives can retire at a reasonable age with a measure of dignity.” Treasurer John Chiang echoed similar sentiments in his subsequently released media statement.

The Secure Choice program was developed in 2012 and enacted in subsequent legislation approved in 2016. It requires all employers with five or more employees that do not offer a qualified retirement savings plan to automatically enroll their workers into this government-run program or be subject to penalties.

CMTA has worked closely with the author and proponents on the development of this program to ensure that manufacturer responsibilities and liabilities are limited and proportional to the level of control they have over the program, which is nonexistent. If the federal resolution is ultimately signed, we will continue to work with the Secure Choice governing board to determine whether there is a workable path forward for all California employers.

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