The plan will automatically convert savers’ assets to a monthly paycheck at retirement unless they opt out of doing so.
The plaintiffs in the case believe California should not be permitted to operate the CalSavers Retirement Savings Program on the grounds that its establishment violates federal ERISA pre-emption rules—claims rejected by both a district and an appellate court.
The proposal creates a mandatory automatic enrollment individual retirement account program for employers that do not offer a retirement plan and employ at least five people.
A court filing cites the change in administration as the reason for backing out of the suit.
A brief filed in a federal appellate court explains how the agency believes a federal district court erred in dismissing the case.
A federal judge dismissed the lawsuit and decided that granting the plaintiffs leave to amend would be futile.
The attorneys argue that the CalSavers program goes against ERISA's intent for a voluntary benefits offering and a nationally uniform plan administration structure.
The lawsuit, alleging the act that created the program is preempted by ERISA, was filed less than a year after the Trump administration and Congress cancelled an ERISA safe harbor established by the Obama administration.
Despite regulatory concerns and opinions that state-run plans will not close America's retirement savings gap, states still implement such programs.
Eighty-nine percent of small employers surveyed said they have a high level of trust in retirement plan providers, compared to 53% for state governments.
Industry pros know there are big differences between financial services providers in termsof business models and their willingness to embrace fiduciary best practices—but many non-investors see a monolithic industry sharing a set of common reputation problems.
“The preliminary data from OregonSaves show that important assumptions about how workers would react to the availability of auto-IRAs appear to be holding up, at least in the context of their behavior within the program," the Center for Retirement Research (CRR) at Boston College says.
According to state authorities, the combined savings of the first groups of participating savers is approaching $5 million.
In the lawsuit, ERIC argued that the Employee Retirement Income Security Act (ERISA) pre-empts the reporting requirements in the OregonSaves state-run retirement program for private-sector workers.