OUR REPUBLICAN PRESIDENT BREAKS WITH HIS ADMINISTRATION:

Several years ago, the Administration proposed that businesses which did not offer some sort of retirement plan be required to offer their employees a payroll-deduction savings plan.  Importantly, the requirement would be limited to offering automatically-enrolled savings for the employees through payroll deduction - there would be no requirement to establish a traditional plan or undergo the extensive regulation they involve under ERISA.  This "IRA auto-enrollment" proposal was originally bipartisan, but became associated with the rather different employer mandate in the Affordable Care Act and so went nowhere in Congress.  

Various states responded to the inaction in Washington by proposing auto-enrollment programs of their own.  Following the title of the first legislation to be enacted, in California, these are generally referred to as "Secure Choice" programs.  Although there are various models, the most frequently considered one would have the state require a payroll-deduction auto-enrollment program of those employers currently not offering a retirement plan.  Unless employees choose to opt out, a portion of their paycheck would automatically be deposited in a retirement savings plan.  The State of Illinois enacted a secure choice plan into law earlier this year and similar bills been introduced in more than a dozen other states. 

Until recently, DoL opposed these efforts.  In order to obtain the assent of small businesses, states wanted to guarantee that the new programs would not involve businesses in ERISA's fiduciary obligations; as a result, legislation in some states specifically provided that the plans could not be subject to ERISA.  DoL, for its part, took the view that only plans covered by ERISA had satisfactory consumer protections and that even if the state operated the plan and employers were required to participate, contributing employers would nonetheless remain fiduciaries.  This interpretation by DoL has been criticized by some ERISA attorneys[v], but until today there was no evidence the Department would reconsider.   The President's announcement means that DoL will now be an ally of the state efforts - and as a result tens of millions can have more secure retirement. 

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