AARP Utah praised the finalization of a rule by the U.S. Department of Labor that confirms states can facilitate the creation of automatic enrollment retirement savings plans for use by small businesses.
These public-private partnerships have the potential to help more than 500,000 workers in Utah, and more than 55 million workers nationwide, who lack access to a way to save for retirement automatically out of their regular paycheck.
“The new ruling from the Department of Labor gives legislators looking at this issue more certainty that state-run retirement plans will pass scrutiny. We look forward to working with the state legislature and Governor’s office on this important issue next session,” said AARP Utah State Director Alan Ormsby.
Senator Todd Weiler, who has championed legislation to create a retirement savings plan for Utah workers in the last two legislative sessions, said, “I believe a voluntary retirement savings plan offered at the workplace will help Utahns become financially secure and reduce the need for government assistance for those with inadequate resources. It makes fiscal sense for employers, employees, the state, and ultimately the taxpayer.”
According to an August 2015 fact sheet released by AARP’s Public Policy Institute, approximately 90 percent of households participating in a workplace retirement plan report that payroll deductions are very important and make it easier to save. Also noted was research finding that nearly two-thirds of employees with access to a retirement savings plan had $25,000 in total savings and investments, and 22 percent had $100,000 or more, compared with just six percent and three percent respectively for those without access to a plan.
Earlier research conducted for AARP Utah showed that 18 percent of retirees in the next 15 years will retire with more debt than savings, at a cost of taxpayers of $3.7 billion in government assistance spending.
More than half of the states are considering ways to address economic insecurity in retirement, including Utah. Four states have already enacted legislation creating Work and Save plans that would be impacted by this rule: Illinois, Oregon, Connecticut, and Maryland.