About 42 percent of private-sector employees don't have a workplace retirement savings plan or any retirement savings, the Wall Street Journal reports. So some states are moving to require employers to give their workers access to a state-run plan by automatically enrolling them in individual retirement accounts invested in mutual funds.
This summer, Oregon became the first state to do this, the Journal said, and eight more, including California and Illinois, are expected to follow soon.
But there is a hitch: These attempts are likely to be challenged in court for allegedly violating federal pension laws. According to the Journal, Oregon and other states are hiring lawyers to declare that their plans don't hold the employer liable if something goes wrong and employees sue. Some experts say the courts may ultimately have to decide that question.
Those who oppose the programs — such as many small-business owners and the Investment Company Institute, a major mutual-fund association — fear that the state-plan initiatives will prompt companies to do away with their 401(k) plans, the Journal said.
Oregon's pilot program, called OregonSaves, began July 1 and includes only 160 employees. But the number of participants is expected to increase by the Jan. 1 deadline for companies with 100 or more workers.
Other states are watching Oregon. "It looks promising so far," Katie Selenski, executive director of California's Secure Choice program, told the Journal.
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