Senate votes to scrap rule to help cities launch retirement plans

news
31 March 2017

The Senate voted yesterday to dismantle an Obama-era rule that would have made it easier for major cities to launch retirement plans for workers who did not have access to one through their jobs. The move formed part of larger effort in Congress to block state and local governments from creating such programmes.

The resolution passed with a 50 to 49 vote and most Republicans voted to scrap the rule, with the exception of senator Bob Corker, a Republican  from Tennessee, who opposed the measure and senator Johnny Isakson, Republican from Georgia, who was absent. The resolution, which was passed by the House in February, now headed to president Trump's desk for a signature.

Some major cities, including New York City, Philadelphia and Seattle, had considered launching savings plans that would expand access to retirement accounts for some workers.

The efforts had however gained more momentum at the state level. At least seven states - California, Oregon, Illinois, Maryland, Connecticut, New Jersey and Washington were in the process of creating state-run retirement plans.

The initiatives had been opposed by some Republicans and business groups who argued that states and cities should not be creating retirement plans. According to some critics, they were worried that the local plans might discourage some employers from offering their own retirement programmes.

According to commentators this marked the 12th time the Republican-controlled Congress had successfully killed an Obama-era regulation through the use of an obscure 1996 law known as the Congressional Review Act.

The law allowed Congress to fast-track the repeal of newly minted rules through a simple majority vote in the House and Senate, and a signature from the president. Once a rule was repealed, a "substantially similar" rule could not be enacted in its place.

The Review Act allowed a period of time for  Congress to nullify regulation before it took full effect. The Labor Department rule was finalised after the last day of May 2016, initiating the time period.





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