Labor sets rules on mandatory retirement enrollment

Labor sets rules on mandatory retirement enrollment

dol-building31-crop-600x3381-crop-600x3381-crop-600x338The Department of Labor has sent proposed rules that would make it easier for states to mandate enrollment in retirement savings plans for workers without access to programs in the private sector.

The Office of Management and Budget noted it received the rule, titled “Savings Arrangements Established by States for Non-Governmental Employees,” but the content of the rule has yet to be posted.

In July, President Obama announced he was instructing Labor to issue guidance for states that want to mandate small employers enroll workers in IRAs.

That initiative was laid out at the Conference on Aging. At least 20 states have proposals in the pipeline that would require businesses with as few as five employees to enroll workers in savings plans.

Initiatives in Oregon, Washington, and Illinois have already passed state legislatures.

But the effort to mandate enrollment in retirement programs at the state level has been slowed by the question of employers’ liability under the Employee Retirement Income Security Act.

In his speech at the Conference on Aging, the president said all of his budget proposals included a federal mandate for comprehensive enrollment, and each year Congress has failed to enact the policy.

“The good news is that states are stepping up,” said the president.

Labor Secretary Thomas Perez echoed the president’s sentiments in a blog post on the matter.

“Time and again, Congress has failed to act,” wrote Perez. “If the federal government can’t move the needle, then we have to do everything possible to encourage innovation that’s already happening at the state level.”

Perez also noted concerns at the state level as to how the plans would comply with ERISA.

“Although the federal courts, not the Department of Labor, are the ultimate arbiter on that question, the department can try to help reduce the risk of litigation challenges to state retirement savings initiatives,” he wrote.

Perez pledged to offer guidance that will pave the way for states to implement mandatory plans that are consistent with federal law.