Congress Kills Obama-Era Retirement Plan Rule for Low-Income Workers

U.S. CongressOn Thursday, the U.S. Senate killed another Obama-era regulation, this time a rule that allowed cities run retirement savings plans for low-income workers without the restrictions imposed by federal protection laws.

The Rule Was Killed on a 50-49 Vote

The bill’s sponsor, Orrin Hatch (R.- Utah) said he expects his colleagues in Senate to repeal another similar rule which benefits state-run retirement plans. However, repealing that rule will not be as easy as the latest one, which was tolled back on a 50-49 vote. States have a higher stake in setting retirement programs for citizens that don’t have a workplace savings plan. And many Republicans in Congress are staunch supporters of states’ rights.

The House has passed both resolutions.

It is the 12th time the Republican-controlled Congress undid a regulation stemming from the last administration. Congress was able to kill Obama’s regulations so fast through an obscure decades-old law dubbed the Congressional Review Act.

The act enables Congress to dismantle a relatively new rule through simple majority on both floors. However, the procedure needs the president signature for the resolutions to go into effect. What’s more, a similar rule cannot take the place of the rule that is being repealed.

The labor rule killed Thursday was the work of the Labor Department which finalized it in May 2016. Because the rule is fresh, Congress was able to repeal it via a resolution.

Congress  Won’t Stop Here

More resolutions are expected to come as Republicans have put many other Obama rules on the chopping block in a bid to deregulate the economy. The GOP argues that regulatory excess is impeding economic growth.

At the end of former president Obama’s second term, the Labor Department exempted retirement plans that are run by municipalities and states from the restrictions imposed by the 1974 Employee Retirement Income Security Act, also known as ERISA. This law was designed to protect workers’ savings.

In California, Illinois and Oregon, low-income workers from the private sector who do not have a 401 (k) retirement plan or other similar benefits are enrolled by default in the state-run plans.

Without ERISA in their way, employers do not need to pay compliance costs when they pass their employers’ money into the plans. Some critics believe Wall Street is interested in killing these plans because they generate competition.
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