Labor Secretary Thomas Perez today announced a proposed safe harbor amendment that is expected to bring states around the country one step closer to getting into the retirement plan administration business.

Addressing an audience at Ariel Investments in Chicago, Perez said the proposed guidance will help retirement plan initiatives at the state level comply with federal law under the Employee Retirement Income Security Act.

The safe harbor says states that establish a payroll deduction-based retirement program with an automatic enrollment design feature will not “give rise” to an employee pension benefit plan under ERISA, according to language in the proposal.

About half the states in the Union are at some point of legislating retirement savings policy.

Plans range in features, from mandates that require businesses with as few as five employees to automatically enroll workers, to plans that would set up a marketplace of retirement providers that ostensibly would foster greater compet

But plans to implement savings requirements have been slowed by a lack of clarity as to whether individual employers could be subject to fiduciary liability under ERISA if they participated in a state-mandated plan.

The release of today’s proposed safe harbor seeks to allay such fears, thereby making it easier for states to legislate and implement mandatory savings programs.

“By making clear that state payroll deduction savings programs with automatic enrollment that conform to the safe harbor in this proposal do not establish ERISA plans, the objective of the safe harbor is to reduce the risk of such state programs being preempted if they were ever challenged,” said language in the proposal.

The DOL says about 68 million Americans are without access to workplace plans.

Employers will have limited involvement in the plans, aside from setting up payroll deferrals, the DOL said in the proposal.

In order for state-run plans to qualify for the safe harbor, employers will be required by law to participate.

In fact, if states make participation voluntary for employers, then employer participants would not qualify for the safe harbor.

The comment period for the proposed safe harbor will close January 16, 2016.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.