Massachusetts is looking at expanding its existing its “Connecting Organizations to Retirement” (CORE) plan so that all employers could participate.
AARP Massachusetts, 775,000 members strong, filed a bill to help people save more for retirement that was heard by the Commonwealth’s Joint Committee on Financial Services on Nov. 5.
An “Act to Establish the Massachusetts Secure Choice Retirement Program and Expand the Massachusetts CORE Plan to All Employers,” (H. 1075/S. 602) would require most Massachusetts businesses to enroll workers in their own sponsored retirement plan, the new Secure Choice program or an expanded existing program—or face a $250 per employee fine.
Massachusetts launched the CORE Plan in 2017 to make 401k plans available to workers at nonprofits with 20 or fewer employees. As of April, 51 nonprofit employers had adopted the CORE plan and efforts were underway to open up the program by uncapping the 20-employee limit.
Supporters point to problem
A release from AARP Massachusetts said Secure Choice makes it easier for businesses to offer employees a way to save for retirement out of their regular paycheck, and called it “an easy, stress-free way to grow retirement savings” so residents can take control of their future.
“A secure retirement is out of reach for over one million Massachusetts residents, especially those who work for themselves or small businesses,” said Mike Festa, AARP Massachusetts State Director. “While Social Security is a critical piece of the puzzle, it is not enough to depend upon. Many future retirees will not be able to handle the rising cost of basic needs and health care and that’s why we need the Secure Choice bill passed into law.”
Bill sponsor Senator Patricia Jehlen, (D-Somerville) Senate Chair of the Joint Committee on Elder Affairs, said it is clear Massachusetts seniors do not have enough saved for retirement. “We rank behind Mississippi with the second highest percentage (61%) of older adults who are economically insecure,” Jehlen said. “Oregon has a fully self-funded version of this proposal after only three years in operation. We can take the strain off state resources and bring people peace of mind when they are able to access more savings during retirement.”
Bill sponsor Rep. Tram Nguyen (D-18th Essex) added, “It’s incredibly important that we help our seniors and soon-to-be seniors to remain in their communities, and this bill would be an important step towards helping many people who currently aren’t saving enough for retirement to have the resources that they will need in the future.”
Data from a new AARP survey shows that a majority (70%) respondents report feeling anxious about having enough money for retirement while nearly half (47%) are not confident they will have enough money to cover healthcare expenses in their retirement years.
The survey showed wide support for a public-private managed state retirement savings option. Nearly all (87%) agree that elected officials should support legislation that would make it easier for small businesses to offer employees a way to save for retirement.
Yet, almost half of Massachusetts’ private sector employees (about 1.25 million) work for an employer that does not offer a retirement plan. The majority (83%) of respondents with no current access to an employer savings plan said it was likely they would take advantage of an employer offered savings plan.
As taxpayers, most (79%) of the survey respondents are concerned that some Massachusetts residents have not saved enough for retirement and could end up being forced to rely on public assistance programs.
Opposition wants private-sector solution
According to a Nov. 5 article on Worcester, Mass.-based telegram.com, National Federation of Independent Business Massachusetts Director Christopher Carlozzi opposed the bill, saying in his testimony at Tuesday’s hearing that the state should instead seek private-sector solutions to problems with accessing retirement plans.
“One of the barriers to small business owner support for retirement savings programs is the high cost of doing business in Massachusetts,” Carlozzi said. “With the costs for health insurance, taxes, mandated leave benefits, energy and unemployment insurance higher in the Commonwealth than in most other states, the available resources of small business owners for support of employee retirement savings are diminished.”
Meanwhile, AARP’s Sarah Gill said inaction is the biggest retirement planning problem during a Statehouse briefing. “Can people go out on their own today to a bank account and open an IRA? Absolutely,” Gill said. “But what we know is, they won’t.”
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
