By Ayesha Rascoe
WASHINGTON (Reuters) - The Obama administration on Thursday issued rules aimed at helping states that set up retirement savings programs for workers by clarifying that the plans are not preempted by federal law.
Under the new rules finalized by the Labor Department, state retirement programs are not preempted by the Employee Retirement Income Security Act (ERISA) as long as they meet certain criteria, the White House said in a statement.
ERISA sets minimum standards for private pensions and health plans.
There had been some concern that having employers involved in these state plans might open states up to lawsuits under ERISA, Labor Secretary Thomas Perez said.
"We believe that this final rule goes a long way to mitigating that litigation risk, because we believe that states who comply with this rule will be on very sound legal footing," Perez said on a call with reporters.
A state savings program will not be considered an ERISA plan if it is administered by the state, includes a limited role for employers and is voluntary for workers, the administration said.
U.S. President Barack Obama has sought to expand retirement savings during his time in office, but his proposals to automatically enroll workers in Individual Retirement Accounts have not made it through Congress.
Eight states have moved to set up their own retirement plans for private sector workers, including California, Connecticut and Illinois.
The Labor Department also proposed rules on Thursday that would allow some large cities to set up retirement plans if they choose.