It is expected to be signed into law by President Trump.
The measure passed by a 50 to 49 margin, with two Republicans, Sen. Bob Corker of Tennessee and Sen. Todd Young of Indiana, defecting from their party and voting with Democrats, who uniformly opposed the resolution.
The vote culminated after several hours of debate. For the weeks preceding the vote, a handful of Republican senators were reportedly withholding support for the resolution, which was brought under the Congressional Review Act, a law that gives Congress power to repeal recently implemented regulations.
Labor finalized the safe harbor for state plans in August 2016. Under the regulation, states were allowed to require small employers to automatically enroll workers in state-administered IRAs, which would not be regulated by the Employee Retirement Income Security Act if the provisions of the safe harbor were met.
The safe harbor met fierce criticism from the financial services industry and business groups, who argued, among other things, that the safe harbor would expose retirement savers to potential abuse by allowing state plans to operate outside the consumer protections built into ERISA.
At issue for some Republicans was the 10th Amendment of the Constitution, which preserves states’ rights to exercise lawmaking authority on matters not delegated to the federal government through the Constitution. Senators Rand Paul of Kentucky, Cory Gardner of Colorado, and Dean Heller of Nevada were reportedly among the Republicans concerned that rolling back the safe harbor would amount to an infringement on states’ rights.
Senate Majority Leader Mitch McConnell, R-KY, cast the 50th vote after the tally was 49 to 49. Sen. Dick Durbin, D-IL, did not vote, but it is expected that had he, Vice President Mike Pence would have cast the tie-breaking vote in favor of killing the safe harbor.
Industry opponents of the safe harbor began issuing statements within minutes of the final vote tally.
“Today’s action in the Senate is the final step to rejecting government-run and mandated IRA plans that are held to weaker consumer protections,” said Jill Hoffman, vice president of government affairs for investment management at the Financial Services Roundtable, which advocates on behalf of insurance and investment companies. “Expanding workplace coverage is a critically important goal and a sentiment we share, but it shouldn’t be done outside of the protections afforded by ERISA.”
On the Senate floor preceding the vote, Democrats from states that have already passed legislation mandating auto-IRA enrollment vigorously defended the safe harbor and hammered Republicans for betraying the party’s often-touted belief in limiting the federal government’s power in favor of states’ authority.
Sen. Ron Wyden, D-OR, called the resolution to roll back the safe harbor a “sprint in the wrong direction” on retirement policy.
“It’s a head scratcher—why the majority here in the Senate would want to make it harder for innovative states like Oregon to put in place a savings program that is voluntary in nature,” said Wyden, who chided Republicans known for preaching that states are the “laboratories of Democracy.”
Sen. Richard Blumenthal, D-CT, said the resolution will “cripple efforts at the state level.” Connecticut is scheduled to roll out its auto-IRA program next year.
And Sen. Patti Murray, D-WA, said the resolution will have a “significant, chilling effect across our retirement system.”
Sen. Elizabeth Warren, D-MA, accused Republicans of bowing to the financial services industry lobby.
Warren explained Republicans’ alleged deference to special interests with four words: “National Chamber of Commerce,” said Warren, whose “armies of lobbyists have been swarming all over Capitol Hill.”
Warren and other lawmakers accused Republicans of putting the interests of the financial services industry before the American people, 55 million of whom do not have access to a workplace retirement savings plan.
“This is what gives Washington [D.C.] such a terrible name,” said Warren.
In a tweet, Senate Minority Leader Chuck Schumer said if President Trump were a true champion of the “working man & woman, he’d veto this now passed bill. We call on him to do so.”