(Adds background on resolution)
By Sarah N. Lynch and Lisa Lambert
WASHINGTON, March 30 A divided U.S. Senate on
Thursday killed a regulation that had exempted city-run
retirement savings plans for low-income workers from strict
pension protection laws.
Utah Republican Orrin Hatch, the resolution's sponsor, has
said he expects the Senate to soon repeal a related rule on
state-operated retirement plans.
That resolution may face a tougher time than the one on
municipal plans, which barely passed in a 50-49 vote. States are
farther along establishing retirement programs for people who do
not have workplace savings plans, and Republicans who advocate
for states' rights are more skeptical of the resolution.
The House of Representatives has already passed both
Thursday's vote marked the 12th time the
Republican-controlled Congress has successfully killed an
Obama-era regulation through the use of an obscure 1996 law
known as the Congressional Review Act.
The law lets Congress repeal a newly minted rule through
simple majority votes in the House and Senate, and a signature
from the president. A "substantially similar" rule can never be
enacted in its place.
The Labor Department rule was finalized after May 2016,
putting it into the window of time set by the law when Congress
can repeal it. Using the resolutions, Republicans have sent
rules spanning a variety of areas to the chopping block in hopes
of loosening regulation they say constricts economic
Thursday's resolution and its near-twin for state plans
counters the trend by maintaining regulatory requirements.
Toward the end of President Barack Obama's tenure, his Labor
Department exempted both state and city-run retirement plans
from the 1974 Employee Retirement Income Security Act, or ERISA,
a law designed to protect workers' savings with detailed
Private-sector workers whose employers do not offer 401(k)
or other retirement benefits, and who often have low incomes,
are automatically enrolled in the plans being launched in states
such as California, Illinois and Oregon.
States say the ERISA exemption lets employers pass workers'
money into plans without footing compliance costs.
They also say Wall Street wants to block the plans because
they create competition.
But the Investment Company Institute, a mutual funds trade
group, the U.S. Chamber of Commerce and others in financial
services say the exemptions shortchange workers from important
federal pension protections that other workers receive.
(Reporting by Sarah N. Lynch; Editing by Tom Brown and Bill