[T]he Vermont Senate passed a bill on Friday that directs state officials to create a public retirement plan geared toward employees of small businesses no later 2019.
The language is part of S.135, an omnibus economic development bill that passed 26-1 on Friday. The bill now heads to the House Commerce and Economic Development Committee.
The bill follows recommendations from the Public Retirement Study Committee, which was created in 2014 to study the feasibility of creating a public retirement plan and told lawmakers in January they should keep moving forward.
The committee said in January that low-income people are disproportionately unprepared for retirement, that small businesses often find it onerous to set up retirement plans for their employees, and that many employers that do offer retirement plans do not allow part-time workers to participate.
In Vermont, only 48.3 percent of workers age 21 to 64 participate in an employer-based retirement plan — the lowest percentage in New England — according to the Corporation for Enterprise Development. States such as California, Connecticut and Oregon have already enacted publicly administered plans.
Under the bill, the committee would set up a program called the Green Mountain Secure Retirement Plan, which would be overseen by a board. The committee has already recommended that the board be the body that authorizes what kinds of investment accounts and mutual funds would be available to users.
Initially, employers with fewer than 50 employees and who do not currently offer a plan to their employees could voluntarily sign up for the plan, and then their employees would be able to opt-out if they don’t want to participate.
After being offered to employers with fewer than 50 workers, the program then would be expanded to include self-employed individuals. After three years, if enrollment is low, the committee would seek ways to get more people to sign up.
“The language says ‘on or before 2019,’” for plan implementation, said Sen. Kevin Mullin, R-Rutland, whose committee spearheaded the bill. “We’re actually hopeful that the retirement plan will be available to people beginning next year.”
Mullin, who identifies as a fiscal conservative, said the plan aligns with his values. “Basically what it’s saying is, ‘You’re the one putting the money into the plan, and you’re the one saving for your own retirement,’ so conservatives should love it,” he said.
He said the bill is carefully written so it won’t interfere with private brokers who manage retirement accounts for employers. Larger companies, such as General Electric or GlobalFoundries, won’t be eligible, he said.
“I believe that people, when they retire, should be able to retire with dignity, and one of the things that makes that happen is if you have money set aside,” Mullin said. “It really isn’t a partisan issue. It’s an issue of basic human dignity.”
Sen. Michael Sirotkin, D-Chittenden, a labor advocate, said he strongly supports the retirement plan. “It’s a very good and creative option to open the door to savings to people who work for employers who don’t sponsor such plans,” he said.
Senate Majority Leader Becca Balint, D-Windham, said the program will not cost the state any money because participating employees and the employers will pay administrative fees to use the public retirement plan.
Balint said 80 percent of employees would participate in a retirement plan if something were available to them, but 70 percent of small businesses in Vermont can’t afford to offer a plan, “so it is a situation where the vast majority of Vermonters have very little saved for retirement.”
She said: “It’s enabling those small businesses to be able to offer something to their employees because right now we’re looking at a huge swath of our population in Vermont that’s looking at retirement with nothing set aside.”
