Vermont is moving forward with expanding access to quality retirement savings options for employees of smaller businesses.
The House voted overwhelmingly in favor of S.135, an economic omnibus bill that included the public retirement plan. The bill passed the Senate in early April, and is now in Conference Committee awaiting final approval before it heads to the Governor’s desk.
The public retirement program, dubbed the Green Mountain Secure Retirement Plan, was proposed by State Treasurer Beth Pearce and the Public Retirement Study Committee, which has spent the past couple of years researching the best way for Vermont to address the pressing retirement crisis that faces many Vermonters, and the state itself.
The program, a voluntary multiple employer plan or “MEP,” will be voluntary for employers with 50 or fewer employees to sign on to, if they don’t already offer a retirement plan. Employees of those businesses will be automatically enrolled to ensure greater participation, but still have the option to opt-out. The plan will be overseen by a seven-member board, including the State Treasurer as chair, and is set to be implemented by January, 2019.
The effort to develop a public retirement plan was initiated because there was a severe need to increase retirement savings, and because there was a new opportunity. In Vermont, almost half of private sector employees (over 100,000 Vermonters) don’t have access to an employer-sponsored plan, which is known to be critical to enrollment. Studies have found that workers are 15 times more likely to save for retirement if they can save through an employer-sponsored plan. A big part of our state’s problem is that the vast majority of our employers are small businesses that can’t afford or don’t have the resources to set up retirement options for their employees. But in 2014, as Vermont’s population swelled and retirement savings dwindled – increasing pressure on the state’s tax base and social services – the Obama Administration acted to allow states to develop state-managed, public retirement programs, something that wasn’t allowed until that point.
Enabling state governments to set up retirement plans is a win for the state, for small businesses, and for individuals. With very minimal cost to the state, small businesses will be able to choose – at little to no cost to them- whether to provide this critical benefit for their employees. And for employees, they’ll be able to choose and easily sign on to a retirement savings plan with confidence and security.
Did your legislator vote YES on S.135? Find out here & thank them!