Many private-sector workers don’t have access to retirement plans through their employers, and states across the country are now trying to solve that issue. The trend has flown under the radar, but well over a dozen states are in the process of setting up (or brainstorming) a state-run retirement plan that caters to private-sector employees.
From Benefits Pro:
According to the Pension Rights Center’s website, 17 states are at some stage of legislating state-administered plans that hope to deliver retirement plan access to the country’s smallest employers.
Among them, Maryland, Connecticut and Illinois have either set up a commission to study creation of statewide retirement programs or taken early steps to create such programs.
Nebraska has held hearings examining the state of its private-sector employees’ retirement readiness. Indiana is moving forward, too, as are Arizona, Colorado, Minnesota, Ohio, Oregon and Vermont.
More specifics on a few of the initiatives from Benefits Pro:
In Connecticut, a panel is evaluating whether state-run automatic individual retirement accounts or other retirement programs could help increase savings. The panel is expected to issue an interim report by May.
In Illinois, legislation has been introduced that would require employers who have 25 or more employees but don’t offer a retirement plan to automatically enroll workers in a Roth IRA with a 3 percent payroll deduction.
In Maryland, a retirement program task force was established after a lawmaker wrote a bill requiring employers with at least five employees who don’t offer a retirement plan to establish an automatic 3 percent payroll deduction into a retirement plan.
California, as usual, was among the first states to have begin implementing the idea of a state-sponsored retirement plan for private sector workers. In 2012, Jerry Brown passed the Secure Choice Retirement Savings Trust Act, which eventually will require all business with over five employees to enroll their employees in the state plan.