Retirement Security Matters: Edition 1

Welcome! to the first edition of Retirement Security Matters – a forum for retirement innovation information sharing focused on states, supporters, and service providers. We share news you can use as you go about the business of making the world a better place for retirement savers.

In this issue we highlight what some of the states have been up to in the early months of 2020. You'll see some legislation, and some rollout refinements. And no good update would be complete without some fun shots of everyday life – so stick with us to the end.

Auto IRA States in Rollout Mode

Oregon (workforce 1.9 million) – the longest running program entered its third year of state-wide operation at the beginning of 2020. In its most recent board meeting Oregon focused on some of the technical elements associated with program rollout, including a plan to extend compliance dates for the state’s smallest employers. The program is also retiring its 2015 Target Date fund and adding a new 2070 option to accommodate young savers. The state has begun technical assistance and enforcement outreach to employers who are 24 months past their deadlines – currently these are employers with 100+ Oregon employees who do not offer retirement plans.

Illinois (workforce 5.7 million) – the second program out of the gate, Illinois has now been live state-wide for over a year. Illinois fast-tracked its rollout and all covered employers, those with 25 employees or more and no plan, should now be facilitating. Like Oregon, Illinois is considering a “clean up round” of technical assistance for non-responsive employers. In February, Illinois introduced legislation that would open the program to more employers, and would make automatic escalation more automatic by allowing savers to opt out, rather than opting in to escalation. Illinois’ program is growing by leaps and bounds due to the larger sizes of some of their covered employers.

California (workforce 18 million) – the largest Auto IRA state is fast approaching its first employer deadline, June 30 for employers with 100+ employees and no plan. The program accepted first contributions from early adopting employers in January of 2019. As of January 2020 nearly 700 employers had registered to begin facilitating and more than ten thousand saver accounts had been established. Importantly, on March 10 the US District Court for the Eastern District of California dismissed claims by a conservative tax group that sought to block the CalSavers program. The Court’s response notes that as a state-mandated auto-enrollment retirement savings program, “CalSavers is neither an employee benefit plan nor does it relate to an ERISA plan,” and that the program is therefore not pre-empted by ERISA. 

Maryland (workforce 2.9 million) - anticipated to be the next live program and sporting some new features like an early focus on lifetime income, MarylandSaves issued its RFP for Program Administration and Investment Management on March 5. Proposals are due by April 17, 2020 and contract award is targeted for June of this year.

States Roundup – Legislative Highlights

Even though it’s a short session year for most, many states have been active with legislation in 2020. Here are a few notes of interest:

Colorado (workforce 2.4 million) – completed its Report and Recommendations to the Legislature, noting that insufficient retirement savings will have a $10 billion fiscal impact on the state over the next 15 years. The report recommended the state 1) Create a state Auto IRA Program and 2) Adopt a statewide coordinated approach to financial education. Colorado introduced legislation on March 9 to do just that.

New Mexico (workforce 950,000) - may have been the first state to get implementing legislation over the line in 2020 as Governor Michelle Lujan Grisham signed HB44 into law on February 26. The New Mexico Work and Save Act calls for the establishment of both a retirement plan marketplace and an Auto IRA program. HB164, a companion funding bill - looks like it did not pass in this session.

Pennsylvania (workforce 6.5 million) – following the publication of its Retirement Security Task Force Report in 2019, Pennsylvania this month introduced HB 2021 establishing the Keystone Saves Program and related entities and funding. Keystone Saves is designed as a payroll deduction auto IRA program, intended to be implemented no later than 24 months from the effective date of the legislation. The bill has been referred to the House Finance Committee.

Virginia (workforce 3.8 million) this month passed HB 775 Virginia College Savings Plan – a study bill directing the Virginia College Savings Plan and stakeholders to analyze current programs to encourage citizens to save. This bill is before the Governor for signature.

There’s plenty more going on, but we have to draw the line somewhere. More news next time.

COVID-19 and Retirement Savings Innovation

From first draft of this first edition to today, the world has changed. You may be reading from the relative safety of a remote office (read: at home). Certainly, work of all kinds has been disrupted. On the saver side, we may see newly unemployed workers tapping retirement accounts for emergency savings. In the innovation space, legislatures are likely to focus on COVID-19 impact remediation before committees reconvene to take up retirement legislation. If anything, disruption like this reinforces the need for automatic, easy saving and ready reserves.

… and in a lighter space

First of all, kudos to Treasurer Dave Young and his team, and to the Colorado Secure Savings

Plan Board for their work and for the introduction of supporting legislation. Here’s a snappie of their press conference in the Colorado Capitol on a recent Monday:

We love this Capitol building – wait, is that a heart forming over the spire?

Back in Oregon, gentle reminders about good behavior:

OK, maybe we were a little bit close ...

And while working on being socially close but physically distant, we think a lot about favorite places. Here’s one on the Salmon river in the foothills of Mt. Hood on a recent Sunday:

That’s a wrap.

If you like this piece, please stick with us. We’ll be back in about two weeks. If you don’t like it, please unsubscribe, below. Comments for us? Please let us know. All information shared is from public sources or used with express permission.

PS: special thanks to Charlie Waibel of Sellwood Consulting Group. Charlie, thank you for keeping us honest by asking us *when* we would get this communication fired up & out of the gate. You are appreciated!