The U.S. Department of Labor will develop rules to help states steer more workers into retirement plans, President Barack Obama said on Monday.
The federal government will aid states as they create legislation requiring some employers to offer a retirement savings plan or automatically enroll workers in an individual retirement account, he said at a White House conference on aging policies. The proposal builds on the “myRA” savings account Obama suggested in 2014 to provide workers with additional options to fund retirement.
“We’ve got to make it easier for people to save for retirement,” Obama said, lamenting that Congress hasn’t acted on his savings proposals. “The good news is states are stepping up, just like they’re stepping up in other areas Congress is not doing its work.”
State governments have proposed savings programs combining the best features of 401(k) plans and pensions to lower costs, provide retirees steadier income and reach workers whose employers don’t offer benefits. Known as hybrid plans, they could triple their share of the retirement market by 2020, according to a report by Global Wealth Allocation.
California passed a law in 2012 that would establish such a plan for private-sector workers. It would pool assets from employees’ paychecks and include a guaranteed rate of return. The state aims to start the plan in 2016, according to the office of state Sen. Kevin de Leon, the main author of the bill.
In December, Illinois established a retirement savings program for people who don’t get a plan through their jobs that caps fees at 75 basis points.
The new Labor Department regulations, to be proposed later this year, will provide “a clear path forward for states to create retirement savings programs,” Obama said.
Legislation Obama has proposed to require companies without retirement plans to automatically enroll workers in IRAs has gone nowhere in Congress. The Obama administration is also developing regulations to require financial advisers to abide by stricter rules when providing retirement-investing recommendations.