State private retirement programs get help from president
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • Deborah Pederson and David J. Rothenberg
      Arena hires 3 to boost global marketing of private credit strategies
      BentallGreenOak agrees to acquire Metropolitan Real Estate Equity
      watch video
      0:45
      Private funds weathered 2020 turmoil
      Daniel McHugh
      Aviva Investors promotes from within for real assets CIO
    • Kieran Mistry
      Hymans Robertson picks head for new non-traditional risk transfer unit
      Troy Saharic
      NEPC brings on director of new business development
      Bill Foley
      Foley-backed SPAC agrees to $7.3 billion deal with Alight
      Jason Schwarz, chief operating officer of Wilshire,
      New owners have big plans for future of Wilshire
    • Senate Majority Leader Chuck Schumer, D-N.Y., wears a protective mask while departing the U.S. Capitol
      Senate virus relief bill drops retirement plan COLA freeze
      A pharmacist administers a dose of the COVID-19 vaccine in Mountain Brook, Ala., on Feb. 21, 2021
      Business optimism grows as vaccinations spread – Fed
      watch video
      0:59
      Coronavirus and the S&P 500: February 2021
      Multiemployer pension measures cleared for relief bill vote
    • Desktop with document showing pie chart with investment types along with a calculator
      OECD proposes revision of its DC ‘good design’ roadmap
      Dominic Scriven, director and portfolio manger of Dragon Capital, speaks during an interview in Ho Chi Minh City, Vietnam in 2006
      Vietnam gets its first private defined contribution plan
      DCALTA releases daily valuation tool for alts in DC plans
      PSCA: Employee participation in non-qualified deferred comp plans rising
    • The tower of Stockholm City Hall rise above the city's skyline on Aug. 6, 2020
      Swedish funds managing $250 billion get slammed for ESG record
      Vapor rises from a petrochemical plant
      New York State Common inks more climate pacts
      Michael Herskovich
      BNP Paribas Asset Management names global head of stewardship
      TPT Retirement taps into low-carbon strategies
    • 2 U.K. pension execs take on ESG investing in new podcast
      Donation illustration
      Jefferies will use trading commissions to do good
      Michael Arougheti
      SPACs ride wave as latest investment darling
      Spirit winners
      Prudential honors young people who are helping out
    • Robert 'Rob' Shafir listens during a Senate Permanent Subcommittee on Investigations hearing in Washington on Feb. 26, 2014
      Sculptor hedge fund hits sixth straight year of outflows
      The WallStreetBets forum on the Reddit Inc. website on a laptop computer and the GameStop logo on a smartphone in an arranged photo.
      GameStop frenzy has hedge fund managers rethinking next moves
      Gabe Plotkin, chief investment officer and portfolio manager of Melvin Capital Management, speaks during the Sohn Investment Conference in New York on May 6, 2019
      Citadel, Point72 back Melvin with $2.75 billion after losses
      Shanghai skyline
      Global hedge funds struggle even in a more open China market
    • The tower of Stockholm City Hall rise above the city's skyline on Aug. 6, 2020
      Swedish funds managing $250 billion get slammed for ESG record
      Louisiana Teachers rehires Mondrian as small-cap manager
      CalSTRS adds alts investments to ESG-themed portfolio
      Vapor rises from a petrochemical plant
      New York State Common inks more climate pacts
    • Manulife taps UBS veteran to oversee its China business
      Herman Bril
      Arabesque Asset Management chooses first CEO
      Railpen hires head trader in preparation for in-house trading
      Andy Moniz
      Acadian picks responsible investing director
    • CalSTRS adds alts investments to ESG-themed portfolio
      District of Columbia Retirement Board executive director to retire
      Police car in the city of San Antonio
      San Antonio fund terminates Lazard from emerging markets strategy
      Fresno County Employees moves $22 million between Eaton Vance funds
    • District of Columbia Retirement Board executive director to retire
      Deborah Pederson and David J. Rothenberg
      Arena hires 3 to boost global marketing of private credit strategies
      Manulife taps UBS veteran to oversee its China business
      Herman Bril
      Arabesque Asset Management chooses first CEO
    • The Charging Bull statue is covered in snow near the New York Stock Exchange on Feb. 11, 2021
      Bain: Private equity managers finish 2020 strong
      Carlyle secures $4.1 billion ESG-related credit facility
      Hamilton Lane raises $3.9 billion for fifth secondary fund
      PSG closes first Europe-focused fund at $1.5 billion
    • AEW chooses head of fund operations and debt finance
      Sebastiano Ferrante and Jocelyn de Verdelon
      PGIM Real Estate turns to staff to fill new roles
      European managers key in on specialist strategies
      Ingrid Jacobs
      Jones Lang LaSalle brings on head of diversity and inclusion
    • Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Neal and Brady
      Retirement security could be only issue both sides accept
      David Ireland
      Sponsors returning to questions about in-plan annuities
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
    • Charging Bull, sometimes referred to as the Wall Street Bull or the Bowling Green Bull, a bronze sculpture that stands on Broadway just north of Bowling Green in the Financial District of New York City
      Top-performing managers Q4 2020
      P&I 1,000 largest retirement plans: 2021
      Retirement in emerging markets
      Outlook 2021
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Louisiana Teachers rehires Mondrian as small-cap manager
      University of Louisville taps Cammack as DC plans consultant
      Cook County allocates $50 million to Mesirow funds
      South Carolina earmarks up to $355 million to 6 funds
    • Louisiana Teachers rehires Mondrian as small-cap manager
      University of Louisville taps Cammack as DC plans consultant
      Cook County allocates $50 million to Mesirow funds
      South Carolina earmarks up to $355 million to 6 funds
    • Independent Investment Consulting Services
      Financial Auditing Services
      Actuarial Services
      Emerging Market Equity Manager Services
    • Taiwan Semiconductor’s No. 1 in the emerging markets book
      U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Tesla cartoon
      Don’t confuse wealth creation with retirement saving
      Top 1000 cartoon
      Top 1,000 retirement plans weather storm just fine
      Infrastructure cartoon
      You must go big on infrastructure, Mr. President
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
    • Investment Trends: Looking Ahead Across Equity Sectors
      Rethinking Market and Reference Data Management
      China is embarking on a new stage of growth
      Gold Outlook 2021
    • Sameer Shalaby
      Commentary: Why should investors care about treasury management?
      David Blitzstein
      Commentary: Without a national retirement policy, Americans face a future of pension crises
      Lawrence Cunningham
      Commentary: Gensler should keep Clayton’s pragmatic proxy adviser rules
      My-Linh Ngo
      Commentary: Pension funds and the role of the debt market in the fight against climate change
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • P&I Content Solutions
      How will gold react?
      To people shaking hands
      P&I Content Solutions
      Lessons From 2020: Today’s OCIO Model Passes a Major Test of Governance
      Sponsored Content By MassMutual
      Leveraging Data to Manage Risk
      Sponsored Content By iShares
      ETFs are becoming a cornerstone of insurance equity portfolios
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      0:45
      Private funds weathered 2020 turmoil
      watch video
      0:59
      Secure choice and other retirement plans at a state level
      watch video
      3:33
      P&I 1,000 by the numbers 2021
      watch video
      1:33
      A look at hiring activity in 2020
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Technology is the New Oil: The Changing Nature of Emerging Markets
    • POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
      POLL: The Biden administration’s economic plans
      POLL: Retirement issues in 2021
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • By the Numbers for February 2021
      Top Performing Managers of Domestic Limited-Duration Fixed Income, 4th Quarter 2020
      Top Performing Managers of Domestic Value Equity, 4th Quarter 2020
      Top Performing Managers of Global Balanced, 4th Quarter 2020
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Technology is the New Oil: The Changing Nature of Emerging Markets
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. DEFINED CONTRIBUTION
February 23, 2015 12:00 AM

State private retirement programs get help from president

Hazel Bradford
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Phyllis Borzi

    Private-sector retirement solutions programs at the state level are getting a boost from the White House.

    The Labor Department is in line to receive $6.5 million from President Barack Obama's fiscal year 2016 proposed budget to support several two-year pilot programs for states to experiment with ways to expand private sector retirement options. Those include 401(k) plans and individual retirement accounts, particularly for people whose employers do not offer them now.

    The proposal would also let Labor Department officials issue a waiver to ensure that a state program would not be pre-empted by the Employee Retirement Income Security Act. Without that waiver, the fear is that a state's program could trigger fiduciary burdens and other liabilities that courts might enforce.

    The potential for legal conflict is a top concern for Phyllis Borzi, assistant secretary of labor for the Employee Benefits Security Administration, where officials are now considering offering regulatory guidance as well.

    Raising hopes

    Inclusion of the pilot program in the $4 trillion federal budget proposal — released Feb. 2 and now awaiting congressional action — is raising the hopes of retirement security advocates pushing states to take the lead.

    “We are encouraged by this signal that the administration values efforts to expand retirement savings opportunities in the states, and is identifying appropriate avenues to support those efforts,” said Cristina Martin-Firvida, AARP director of financial security and consumer affairs in Washington.

    “I think this is a positive sign, and I think there's going to be activity,” said Karen Friedman, executive vice president and policy director at the Pension Rights Center in Washington.

    It was also welcome news to policymakers in states like Oregon, where Treasurer Ted Wheeler and others are hoping for passage of legislation implementing recommendations from a retirement security task force.

    The task force is calling for a defined contribution plan with automatic enrollment and auto escalation, no required employer contribution and pooled professional investment management.

    Oregon and other states considering new retirement plan options are proceeding cautiously to avoid triggering potential conflicts with ERISA, which could leave taxpayers or even employers vulnerable to litigation.

    The flip side of avoiding ERISA is that states have to build their own protections for participants.

    “A lot of states have wrestled, will wrestle with the ERISA issue,” said Michael Cox, a spokesman for Mr. Wheeler.

    “The fact they want to set aside some money for this is a good thing.”

    As at least 20 states consider similar approaches but worry whether ERISA will apply, “that question is out there,” said Eric Keener, partner and chief actuary with Aon Hewitt in Norwalk, Conn. He sees the White House proposal advancing the cause for several reasons. “It could matter from the standpoint of whether an employer wants to maintain a plan, or the state might be concerned about fiduciary liability for taxpayers. From the employers' perspective, if it is not (covered by) ERISA, that would be a positive. It's somewhat of a balancing act,” said Mr. Keener.

    Careful design

    “Generally the hope is that you can design it so that it doesn't fall under ERISA,” said Christian Weller, a senior fellow at the Center for American Progress in Washington and a professor of public policy at the University of Massachusetts, Boston. “The big stumbling blocks have been pooled investment and auto features.”

    He noted that while Congress would have to approve specific waivers for state plans, the federal budget mention “is more of a messaging tool to say, we want this policy space to be filled out. They deserve a look and some experimentation.” Another message, he said, “is there is nothing happening at the federal level.”

    States are not waiting. The latest proposal came from Kentucky, in legislation introduced Feb. 3that would create a privately run retirement savings plan for residents who cannot access a plan at work. With a nod to the Treasury Department's “myRA” retirement savings program now being rolled out in phases, the proposed Kentucky retirement account, dubbed KYRA, is being promoted as a way to provide better retirement security without risks to employers or taxpayers.

    The first full-scale test case of Washington's new attitude is likely to be in Illinois, where Pat Quinn signed the Illinois Secure Choice Savings Program Act in January, right before he left office. The Illinois act requires Labor Department officials to weigh in on an ERISA exemption.

    Illinois' program features auto enrollment and payroll deductions for private-sector employees whose employers do not offer retirement plans outside of Social Security and have at least 25 employees. These plans will take contributions only from employees, who will be automatically enrolled at 3% on June 1, 2017, unless they opt out.

    “It's good for the states to experiment with this,” said David Morse, an ERISA attorney with K&L Gates in New York. Mr. Morse is now helping the California Secure Choice Retirement Savings Investment Board, Sacramento, design an ERISA-friendly program. The 2012 Californiastatute enacting the program “says it has to be non-ERISA, but we don't know what that means. It's not clear what is pre-empted or not pre-empted.”

    Clarification wanted

    Support and clarification from the Department of Labor would be welcome, he said. “The states are the ones taking the lead. The (federal)government should either get out of the way or help,” said Mr. Morse.

    Diane Oakley, executive director of the National Institute on Retirement Security in Washington, also sees it as a “really good signal,” but worries that trying to circumvent ERISA could lead to court challenges. Still, she says, “I think ultimately we could find a way.”

    As states figure out how to design plans with successful investment options for participants, the private sector can also help spur competitive solutions, said Josh Cohen, a Chicago-based managing director and head of institutional defined contribution business for Russell Investments. “I think there will be more activity. There's a real recognition of a need to provide more coverage. It starts with small plans, but it has the potential to evolve to how plans are provided today and maybe in the future.”

    Related Articles
    Connecticut governor signs state retirement security board into law
    States should step in to offer retirement options
    Illinois General Assembly passes private-sector retirement savings act
    Hatch lays out retirement savings agenda for Senate Finance Committee
    NYC comptroller announces group to study retirement plan for private-sector emp…
    GFOR: BlackRock's Fink says country is at 'a crossroads'
    GFOR: States working to solve 'crisis of unpreparedness'
    Oregon Legislature OKs state-sponsored plan for private sector
    Oregon governor signs bill to create retirement savings plan
    Maryland establishes commission to study expanding private-sector retirement sa…
    DOL stance boosts private-sector plan efforts
    Oregon names Arnerich Massena co-founder as executive director of private savin…
    Treasury Department launches myRA program
    Proposed rules for state secure choice plans released by DOL
    OECD: Many countries need to increase social security safety nets
    Recommended for You
    OECD proposes revision of its DC ‘good design’ roadmap
    OECD proposes revision of its DC ‘good design’ roadmap
    Vietnam gets its first private defined contribution plan
    Vietnam gets its first private defined contribution plan
    DCALTA releases daily valuation tool for alts in DC plans
    DCALTA releases daily valuation tool for alts in DC plans
    Lessons From 2020: Today’s OCIO Model Passes a Major Test of Governance
    Sponsored Content: Lessons From 2020: Today’s OCIO Model Passes a Major Test of Governance
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Rethinking Market and Reference Data Management
    Investment Trends: Looking Ahead Across Equity Sectors
    China is embarking on a new stage of growth
    Gold Outlook 2021
    Shifting DC Times - Winter 2021
    GP-LED OPPORTUNITIES AT THE SMALLER END OF THE MARKET
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center