Business & Economy

Legislature passes bill creating public retirement plan

Beth Pearce
Vermont State Treasurer Beth Pearce. File photo by Amy Ash Nixon/VTDigger

The Legislature has sent a bill to Gov. Phil Scott that would create a publicly administered retirement plan for employees of small businesses by 2019.

The Legislature passed the public retirement plan as part of this year’s comprehensive economic development bill, S.135. The bill passed both the House and Senate on Thursday with only one person from both chambers voting against.

The specifics of the program are largely the same as what was in the bill that the Senate passed in April. Lawmakers said at the time the plan must be enacted by 2019, but could be set up as soon as 2018.

Initially, the retirement program would be available to employers with fewer than 50 employees and who do not currently offer a plan to their employees. Employers could voluntarily sign up for the plan, and then their employees would be able to opt-out if they don’t want to participate.

Beth Pearce, the state treasurer, has been leading a work group for the past three years to set up the retirement program, called the Green Mountain Secure Retirement Plan. She praised the bill’s passage on Friday.

“Every Vermonter deserves an opportunity for a lifetime of financial wellbeing,” Pearce said in a statement. “The passage of this bill will allow the State to make substantive steps towards implementing a voluntary retirement program for Vermonters who currently lack access to employer-sponsored retirement plans.”

“Today 104,000 Vermonters do not have access to employer-sponsored retirement plans,” she said. “I look forward to working with businesses, advocacy groups, and other stakeholders to implement a program that works for all Vermonters.”

Lindsay DesLauriers, the state director for Main Street Alliance, a group that represents small businesses, also praised the passage of the bill. She said the program allows workers to have retirement benefits without placing an administrative burden on employers.

“Most small businesses do not have the investment experience or time to research available private retirement plans and make a decision about which plan is the best choice for their employees,” DesLauriers said in a statement.

“The (retirement plan) will enable employees of small businesses and small business owners themselves the opportunity to work toward economic security later in life through secure retirement savings,” she added.

S.135, which has more than a dozen sections, also creates a legislative study committee to review raising the minimum wage and what impacts it would have on the so-called benefits cliff, in which low-income people are discouraged from getting raises if it means losing benefits like subsidized health care and child care.

The bill also includes several of Scott’s economic development priorities, including an expansion of tax credits for people who build affordable housing. Those priorities will not go into effect unless Scott signs a budget.

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  • Edward Letourneau

    “…Every Vermonter deserves an opportunity for a lifetime of financial wellbeing,” This would be more welcome if they would stop taxing people until they have to leave this state for their wellbeing in retirement. — Its not a minor issue. When people can look at southern states and calculate a 12,000 to 15,000 dollar increase in disposable retirement income, you know the taxes and fees here are grossly excessive — and worse, retirees are getting nothing for their taxes and fees.

    • Dominic Cotignola

      I will like to see that study of the Southern States. Do you have a link?

      How does taxes and fees “make” someone poor? I don’t think I’ve ever heard of taxes and fees making someone go poor. At least none of my friends have gone poor from living in this state. Usually it’s a lose of a job, family crisis or medical bills.

      • Edward Letourneau

        Lets see, if I live in vermont with an average cost in taxes and fees of 6500, and a cost of living 10% about the national average we have 10,000 per year that is removed from retirement income and there is nothing for it. In other states the taxes, fees are 50% or less of what they are here, and cost of living is 10% below the national average. So you get to add 8 or 9000 to your disposable income. — Now I don’t know what you have lined up for retirement, but if all you have is say 25,000 income, and your subtract 10000 for it, you have an income below the poverty line. Thank makes you poor — and if you don’t pay or can’t pay the taxes, they take your home.

        Now you won’t find a link. You have to dig out information because it can vary by country. Just like taxes and fees very by vermont town.

    • Doug Eisler

      You beat me to the punch. I have more than a few friends from Vermont that have moved south for that very reason.
      And I don’t have a link for that….

  • So.. so instead of going with a national organization to manage retirement for their employees, employers can let the state manage their employees’ retirement.
    Isn’t the state retirement fund underfunded? This could unfortunately, cynically be viewed as a ponzi scheme.

  • walter carpenter

    “This would be more welcome if they would stop taxing people until they have to leave this state for their wellbeing in retirement.”

    If they can afford to leave Vermont for their “wellbeing in retirement” I am sure that they would not need this program. But so many Vermonters do not have that option of a “wellbeing in retirement,” because they do not have a retirement in the first place.

    • James Hall

      Walter: More disposable income in the working years would allow the individual to invest in a retirement plan, of his own choosing!!!! Gee, what a novel idea!

    • Edward Letourneau

      Nonsense. Leaving is not a that costly.

  • Can the folks that don’t work and are being comped by the public unionize since they’re getting checks from the government? In this bill, will the state pay into a retirement for for these folks?

  • Andrew Brewer

    How about some detail about how this works?