AUGUSTA – On Wednesday, the Health Coverage, Insurance and Financial Services Committee gave strong, bipartisan support to a bill from Sen. Eloise Vitelli, D-Arrowsic, that builds on the Maine Retirement Savings Program, with the ultimate goal of making it easier for businesses to sign up. LD 1082, “An Act to Advance the Maine Retirement Savings Program,” received an Ought to Pass vote of 8-1.
“This bill would extend the start date for statewide implementation for the Maine Retirement Saving Program, while both allowing for a smaller pilot program to start this fall and phasing in the program based on employer size,” said Sen. Vitelli, who sponsored LD 1622 in 2021, which created the Maine Retirement Savings Program. “Although important milestones have been reached, the board and the program are not yet ready. This is not uncommon for new programs, especially of this size and scope. It is critical that we advance this bill so that more Mainers can have a more financially secure and stable retirement.”
“As a young professional, I’m passionate about making sure Mainers of all ages have the resources they need to easily save for retirement,” said Sen. Trey Stewart, R-Presque Isle, who co-sponsored LD 1622 and LD 1082. “From Day One, we wanted to make sure this program was easy to use for both workers and businesses. This bill will give the Maine Retirement Savings Board more time to get the program up and running, and ensure its successful launch.”
The Maine Retirement Savings Program was created by LD 1622, the Work and Save bill. The program is a way for working Mainers to contribute to a Roth IRA directly from their paycheck. Employers who don’t offer their own retirement savings plans will facilitate a deduction for their employees, straight from their paycheck. These employers cannot contribute any funds to the plan. The deducted funds go into a Roth IRA, following participants from job to job until that person is ready to retire. At least six other states have similar programs.
LD 1082 would update and make several changes to the Retirement Savings Program, including:
· Postponing the dates by which covered employers are required to participate in the program, and postponing the dates when the Maine Retirement Savings Board may begin assessing penalties to employers who fail to participate.
· Authorizing the board to implement the program in stages, which may include a pilot program and phasing in the program based on the size of employers, or other factors. A covered employer shall offer the program to its covered employees no later than Dec. 31, 2024.
· A covered employer with fewer than five employees is not required to offer the program to its covered employees but may opt-in to the program.
· Increasing the maximum amount that employees may contribute to the program from 8% to 10% of salary or wages per year.
“AARP has been engaged in launching similar programs in other states over the past several years. This experience has demonstrated to us the importance of taking the necessary time to ensure that Maine’s program will meet the needs of our workforce,” said Alf Anderson with AARP Maine, in testimony supporting the bill. “AARP Maine is eager to see the Maine Retirement Savings Program up and running so that all Mainers will be able to adequately save for their retirement.”
According to data from AARP, approximately 46 percent of private-sector workers in Maine — about 235,000 people — do not have access to an employer-sponsored retirement savings program. Nationally, 26 percent of working-age adults say they have no retirement savings at all.
A 2017 report published by the Margaret Chase Smith Policy Center at the University of Maine states that, “Inadequate savings for retirement creates fiscal costs due to increased elderly reliance on public assistance … Simulations show that increasing retirement income through greater preretirement savings can substantially reduce the need for taxpayer contributions for public assistance.”
LD 1082 now faces votes in the Senate and House.