Nearly a million Colorado workers who lack a retirement savings plan at work will soon gain that benefit under a bill that Gov. Jared Polis signed into law Tuesday.
The Colorado Secure Savings Program, contained in Senate Bill 200, ensures that workers at businesses with at least five employees have access to an Individual Retirement Account funded through automatic payroll deductions. Workplaces that don’t provide a retirement savings plan will have to offer a new one administered by the Colorado state treasurer under the direction of an advisory board.
“The data and science show this approach will increase the number of savers early in their careers, and they will be better prepared for retirement,” Polis said during the bill’s signing.
The Bell Policy Center in Denver spent seven years working on the issue and made five runs at passing a bill, culminating with this year’s successful attempt. Colorado’s program is modeled after one in Oregon. Connecticut and California are also starting similar workplace saving programs.
“I think we were able to quell a lot of the opposition. Folks had enough time to see what we were proposing wasn’t that radical at all. The business community finally understood that this wouldn’t hurt anything they cared about,” said Scott Wasserman, Bell’s president.
Proponents of the program argued that nearly half of all U.S. households have no retirement savings, and estimated that more than 900,000 workers in the state lack access to a retirement plan option at work, with young workers and minorities more likely to lack access.
Aside from making it easier for workers to build up retirement savings and for young workers to get an early start, the program also helps smaller businesses provide a workplace benefit common at larger firms. Supporters also argued that having more workers with retirement savings would reduce the burden on Colorado taxpayers over the long haul. And financial service providers, who initially opposed the program, would get more potential customers who had accumulated assets in their plans, which will be portable.
Individuals can set up an IRA on their own in cases where an employer doesn’t offer one, but not many individuals were doing that.
“We were finding the thing that was getting people into an IRA was access to that IRA at work,” Wasserman said.
An exemption was carved out for businesses with fewer than five employees. Workers also can opt out of the savings plan, although the hope is that most will participate.
It’s unclear exactly how long it will take the state treasurer’s office to set up and begin operating the program, but Wasserman estimated that plans could be available in the second half of 2021.
Source: Read Full Article