Several municipal governments, including New York, Philadelphia and Seattle, have considered creating city-run retirement plans for people without workplace options.
“The regulation puts private marketplace plans at a disadvantage. This vote wisely overturns the regulation,” Dirk Kempthorne, president and CEO of the American Council of Life Insurers, said in a statement.
The House has passed a similar bill and another one that would make it more difficult for states to provide retirement plans to private sector workers. The Senate has yet to vote on a bill that would affect state-run plans.
Lawmakers in 30 states have considered providing government-run retirement plans to private sector workers.
The Senate vote on repealing rules for state-run plans may face stronger opposition.
Seven states already have approved programs: California, Connecticut, Illinois, Maryland, New Jersey, Oregon and Washington state. Oregon is scheduled to open its retirement plan to a small group of workers starting July 1.
“It was a razor-thin vote and we hope we can educate a few more senators to defeat the bill [that would affect state-run retirement plans],” said Karen Friedman, the Pension Rights Center’s executive vice president and policy director.