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Proposed Congressional Repeal of Federal Regulations Supporting State Auto-IRAs Threatens Retirement Security of 13 Million Workers in Five States

Proposed Congressional Repeal of Federal Regulations Supporting State Auto-IRAs Threatens Retirement Security of 13 Million Workers in Five States
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  • Republicans in Congress are trying to repeal Department of Labor (DOL) regulations that provide a safe harbor for states and large cities to sponsor retirement savings programs for private sector workers without running afoul of federal pension laws. Currently, five states–California, Connecticut, Illinois, Maryland, and Oregon—are in the process of establishing Auto-IRAs, also known as Secure Choice programs, which will provide workers whose employers do not offer a retirement plan an easy, low-cost way to save for retirement. Congressional repeal of the safe harbor regulations would throw these efforts into a legal gray zone and threaten the retirement security of millions of workers. This brief highlights the following facts:

    The need to increase access to retirement saving vehicles is greater than ever.

    • Nationally, the share of private sector workers without access to a pension or 401(k) increased from 38% in 1998 to 56% in 2015.
    • Just since 2012, the number of employees without access to a retirement plan increased from 45 million to 55 million—an addition of 10 million workers, reflecting both employment growth and decline in employer sponsorship of retirement plans.

    Congressional repeal of safe harbor regulations for Auto-IRAs would jeopardize the retirement security of 13 million workers in the five states that have already passed Auto-IRA legislation.

    • California, Connecticut, Illinois, and Maryland, Oregon are in various stages of standing up Auto-IRAs. They have expended considerable resources to design programs that meet the needs of employees and employers while conforming to federal regulations.
    • A repeal of the DOL safe harbor for state- and city-sponsored Auto-IRAs would
      disproportionately impact the most vulnerable workers: low- wage workers, small business employees, and Latinos who are greatly disadvantaged in workplace retirement plan access.

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