PROSPERS Act

To amend the Employee Retirement Income Security Act of 1974 with respect to the scope of employee pension benefit plans. 1. Short title This Act may be cited as the Preserve Rights Of States and Political subdivisions to Encourage Retirement Savings Act PROSPERS Act 2. Definitions Section 3 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1002 (1) in paragraph (2)— (A) in subparagraph (A), by striking subparagraph (B) subparagraphs (B) and (C) (B) by adding at the end the following: (C) (i) The terms employee pension benefit plan pension plan section 7701(a)(37) (I) the program is specifically established pursuant to State or qualified political subdivision law; (II) the program is implemented and administered by the State or qualified political subdivision establishing the program (or by a governmental agency or instrumentality of either), which is responsible for investing the employee savings or for selecting investment alternatives for employees to choose; (III) the State or qualified political subdivision (or governmental agency or instrumentality of either) assumes responsibility for the security of payroll deductions and employee savings, including by requiring that amounts withheld from wages by the employer be transmitted to the program promptly and by providing an enforcement mechanism to assure compliance with this requirement; (IV) the State or qualified political subdivision (or governmental agency or instrumentality of either) adopts measures to ensure that employees are notified of their rights under the program, and creates a mechanism for enforcement of those rights; (V) participation in the program is voluntary for employees; (VI) all rights of the employee, former employee, or beneficiary under the program are enforceable only by the employee, former employee, or beneficiary, an authorized representative of such a person, or by the State or qualified political subdivision (or governmental agency or instrumentality of either); (VII) the involvement of the employer is limited to— (aa) collecting employee contributions through payroll deductions and remitting them to the program; (bb) providing notice to the employees and maintaining records regarding the employer’s collection and remittance of payments under the program; (cc) providing information to the State or qualified political subdivision (or governmental agency or instrumentality of either) necessary to facilitate the operation of the program; and (dd) distributing program information to employees from the State or qualified political subdivision (or governmental agency or instrumentality of either) and permitting the State or qualified political subdivision (or governmental agency or instrumentality of either) to publicize the program to employees; (VIII) the employer contributes no funds to the program and provides no bonus or other monetary incentive to employees to participate in the program; (IX) the employer’s participation in the program is required by the law of the State law or qualified political subdivision; (X) the employer has no discretionary authority, control, or responsibility under the program; and (XI) the employer receives no direct or indirect consideration in the form of cash or otherwise, other than consideration (including tax incentives and credits) received directly from the State or qualified political subdivision (or governmental agency or instrumentality of either) that does not exceed an amount that reasonably approximates the employer’s (or a typical employer’s) costs under the program. (ii) A State savings program will not fail to satisfy the requirements of subclauses (I) through (XI) of clause (i) merely because the program— (I) is directed toward those employers that do not offer some other workplace savings arrangement; (II) utilizes one or more service or investment providers to operate and administer the program, provided that the State (or governmental agency or instrumentality of the State) retains full responsibility for the operation and administration of the program; or (III) treats employees as having automatically elected payroll deductions in an amount or percentage of compensation, including any automatic increases in such amount or percentage, unless the employee specifically elects not to have such deductions made (or specifically elects to have the deductions made in a different amount or percentage of compensation allowed by the program), provided that the employee is given adequate advance notice of the right to make such elections and provided, further, that a program may also satisfy the requirements of such subclauses (I) through (XI) without requiring or otherwise providing for automatic elections such as those described in this subclause. (iii) For purposes of this subparagraph, the term ‘ qualified political subdivision (I) has the authority, implicit or explicit, under State law to require employers’ participation in the program as described in clause (i); and (II) at the time of the establishment of the political subdivision’s payroll deduction savings program— (aa) has a population equal to or greater than the population of the least populated State (excluding the District of Columbia and territories listed in paragraph (10)); (bb) has no geographic overlap with any other political subdivision that has enacted a mandatory payroll deduction savings program for private-sector employees and is not located in a State that has enacted such a program statewide; and (cc) has implemented and administers a plan, fund, or program that provides retirement income to its employees, or results in a deferral of income by its employees for periods extending to the termination of covered employment or beyond. (iv) For purposes of clause (i)(III), amounts withheld from an employee’s wages by the employer are deemed to be transmitted promptly if such amounts are transmitted to the program as of the earliest date on which such contributions can reasonably be segregated from the employer’s general assets, but in no event later than the last day of the month following the month in which such amounts would otherwise have been payable to the employee in cash. .

Summary: Preserve Rights Of States and Political subdivisions to Encourage Retirement Savings Act or the PROSPERS Act This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to specify that states and certain political subdivisions may establish and administer voluntary payroll deduction retirement savings programs for private sector employees that are not considered employee pension benefit plans or pension plans covered by ERISA if the plans meet certain requirements. The bill requires the plans to be established, implemented, and administered by states or political subdivisions. The plans must also be voluntary for employees and meet other specified requirements, including restrictions on the involvement of employers and obligations to enforce the rights of employees.