Thought Leadership Thursday
Taking on the National Retirement Security Challenge
Thought Leadership Thursday Article
October 18th through October 24th is National Retirement Security Week in our country, a time to raise public awareness about the importance of saving for retirement, and a time for us as policymakers and leaders to think about what more we can do to close the retirement savings gap.
It’s no secret that retirement readiness is a significant challenge for far too many. When you consider all working age Americans, not just those with access to a retirement plan, the median retirement account balance is $0. Without savings, workers may rely entirely on social security in retirement – which was never intended to be someone’s sole source of income, and is rarely enough to cover all expenses, increasing the likelihood that retirees will need to access state social safety net programs.
At the core of this challenge is the issue of access, or lack thereof. Nearly half of private sector workers in this country lack access to a workplace-based plan. Research tells us that a person is 15 times more likely to save if they can do it through payroll. Without increasing the ability for more individuals to save at work, it seems unlikely that we’ll close the savings gap.
Collectively, we have all sought to address that access gap – creating programs that provide more workers in our states with the opportunity to save, focusing on efficiencies and behavioral finance insights that make savings easier and employer responsibilities simpler. For some of us, that means we have created Multiple Employer Plans (MEPs) that take on some of the administrative obligations for employers who want to offer a traditional plan. For others, it means creating Automatic IRA programs, which focus on employee savings through traditional IRA accounts, and limited employer responsibility. Our state models are not all the same, but our end goals are. We want to remove the barriers that employers often face when deciding whether to offer a retirement program. We want every worker, no matter who employs them or where they live, to be confident that they can retire with dignity and live out their golden years with financial security.
This Retirement Security Week, we want to take a moment to celebrate recent milestones for each of our programs. CalSavers had its first enrollment deadline last month and registered thousands of employers in just the last few weeks. Colorado officially formalized its Board for the state’s Auto-IRA program and held its first meeting this month. The Massachusetts CORE Plan welcomed its 87th employer with 80% of participating employers opting to provide employer contributions. Illinois Secure Choice and OregonSaves will celebrate their second and third-year anniversaries respectively next month. Pennsylvania introduced Auto-IRA legislation with bi-partisan support just prior to the pandemic lockdown and had a committee hearing on the subject earlier this month. Vermont recently finalized their program administrator contract for their new MEP program. Our colleagues in Maryland and Connecticut are actively engaged in supporting new programs in their states, and still more of you are spearheading or participating in task forces hoping to determine how best to address the retirement savings crisis in your state.
For the state programs that are up and running, we have enabled over 175,000 workers to save over $115 million dollars – and we’re just in our early days. As these programs fully roll out and new programs go live, we will give millions of workers the ability to save for their futures.
We’re excited this work has become a focus point for Treasurer’s Offices across the country and encourage all our colleagues to explore how you can take on one of the biggest policy challenges facing our states and this nation. The global COVID-19 pandemic has further heightened the need and importance of having adequate savings for times of financial uncertainty as well as during our retirement years. Every person deserves the opportunity to a secure retirement. We have the tools at our disposal to help make that a reality. The role of Treasurers in advancing, administering, and leading state-administered retirement programs has been a discussion at many of the NAST conferences and meetings over the last few years. (Take a look at our five sessions from the most recent TMTS symposium if you haven’t already – they are still available on demand!) As these conversations continue, we urge you to join us.
Courtney Eccles, Director of Illinois Secure Choice, Illinois Treasurer’s Office
David Lynch, Executive Director, Commonwealth of Massachusetts DC Plans
Katie Selenski, Executive Director of CalSavers, California Treasurer’s Office
Keith Welks, Deputy Treasurer for Fiscal Operations & Policy, Pennsylvania Treasury Department
Leah Marvin-Riley, Policy & Communications Director, Colorado Department of the Treasury
Michael Clasen, Deputy Treasurer, State of Vermont