The House will use the Congressional Review Act to overturn the state and local retirement plans rules, which allow for government-run auto-IRAs managed by states and certain municipalities to be exempt from longstanding accountability measures—contained in the federal ERISA law—to protect Americans’ money. People should have access to safe and reliable retirement savings programs, and states will still be allowed to run auto-IRA funds after these rules are repealed, but these rules have many negative consequences because it doesn’t hold state-run programs to the same rules that are applied to the private sector.
Workers wouldn’t have the same protections in these retirement accounts as they do in private accounts, people would have less control over their savings, and small businesses would be discouraged from continuing their 401(k) plans and encouraged to push their employees onto the state-run, second-tier accounts where they are legally barred from providing employer contributions.
Not to mention, states have shown themselves to be very bad managers of people’s retirement savings, which as much a danger to American workers as it is to state budgets.
Some states are, admittedly, rather terrible money managers, and trusting those states to manage even more people’s retirement accounts could hurt those workers and put their hard-earned retirement savings at risks. California, for example, has “managed” its public pension system to a $281.5 billion hole. Illinois’s $130 billion pension debt amounts to $4,000 per person in the state. Across the United States, state pensions are underfunded by $5 trillion, according to some estimates.
Who It Hurts
Though these new retirement funds would be separate from the currently underfunded state pension systems, it’s not hard to imagine that these state-run retirement accounts will also underperform and that retirement savers or taxpayers will need to fill the gaps.
Instead, there are many other solutions to expand access to retirement plans and encourage savings. One important solution is to allow multiple small businesses to join together to form a single plan for employees. These Multiple Employer Plans—which would expand access to retirement accounts—have bipartisan support and even passed the Senate Finance Committee last year unanimously.
Why We’re Doing This
The bureaucracy is a threat to our
· and People
The House has already passed legislation to change the structure in Washington so the federal bureaucracy is subject to the people and so we stop getting the same bad results year after year. Now, we’re targeting specific harmful regulations and stripping them off the books.
What We’ve Already Done
The House has already voted to overturn many harmful regulations using the Congressional Review Act: