The U.S. Senate voted narrowly on Wednesday to repeal an exemption from strict federal protections that former President Barack Obama's Labor Department had given to state-sponsored retirement savings plans for lower-income workers.
The exemption, championed by states such as California but opposed by the mutual fund industry, had freed the state-run plans from the strict compliance requirements of the Employee Retirement Income Security Act, or ERISA.
Private-sector workers whose employers do not offer 401(k) or other retirement benefits, and who often have low incomes, are automatically enrolled in plans being launched in some states, such as Illinois. States say the exemption would have let employers pass workers' money into plans without footing ERISA compliance costs.
It stoked fights in Washington, however, over the reach of federal regulation, states' rights and income inequality.
The Republican-led Senate passed the resolution repealing the exemption by a vote of 50-49. The House of Representatives, also controlled by Republicans, previously approved the measure, which President Donald Trump is expected to sign into law.
It was the 14th Obama-era rule killed by Congress under the once-obscure Congressional Review Act, which allows lawmakers to repeal newly minted regulations and forbids agencies from enacting similar rules in the future.
In mid-April, Trump signed a nearly identical resolution affecting city-run retirement plans, which are in the design stages. But the resolution for state-run plans was stuck in limbo for weeks, as Republicans struggled to gather votes and major lobby groups representing retirees and business interests turned up the heat on lawmakers.
Senator Dick Durbin, an Illinois Democrat, missed Wednesday's vote because of minor heart surgery, helping the Senate avoid a tie.
Republican Senator Todd Young of Indiana broke party ranks to oppose the resolution, saying Americans were in a "real and ongoing crisis" to save enough money for retirement.
"While state-based retirement plans are not my first choice, if implemented carefully, they could help close the retirement savings gap," he said in a statement to Reuters.