The White House endorsed Congressional resolutions of disapproval that would nullify two Department of Labor (“DOL”) rules (“Savings Arrangements Established by States for Non-Governmental Employees” and “Savings Arrangements Established by Qualified State Political Subdivisions for Non-Governmental Employees“). The two DOL rules set forth requirements by which states could establish state payroll deduction savings programs for private-sector employees without causing the states or private-sector employers to establish “employee pension benefit plans” or “pension plans” under ERISA. The White House’s statement indicated that the DOL rules allowed a “new type of State-based retirement plan that would lack important Federal protections, and they would give a competitive advantage to these public plans.”
Lofchie Comment: In effect, the Department of Labor under the Obama administration permitted state governments to go into the business of providing financial services to non-governmental employees, but without being subject to the same requirements as would apply to private financial institutions providing financial services. It appears that the Trump administration will likely withdraw that permission.
This seems a positive “pro-regulatory” action by the Trump administration. There does not seem to be any policy reason why the government should provide services that had been heavily regulated when offered by private enterprise, but unregulated when offered by a governmental entity. Governmental entities are subject to conflicts of interest, too, and should be subject to the same duties of loyalty and care as private businesses. To put it differently, there is no reason to think that governmental entities require less oversight than private businesses.