The Vermont General Assembly has passed a bill to create a voluntary public retirement option for small businesses known as the Green Mountain Secure Retirement Plan.
The plan will be based on a multiple employer plan model, and open to businesses with 50 employees or fewer that do not offer a retirement plan, as well as to self-employed workers. If an employer adopts the program, auto-enrollment of employees will occur, but employees will have the choice to opt out.
“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,” said Vermont State Treasurer Beth Pearce in a statement. “This program will broaden the opportunity for more Vermonters to be better prepared for retirement and in doing so strengthen the economic vitality of our state.”
According to an AARP report cited by Pearce, some 104,000 Vermont residents, or 45% of the state’s private sector employees, do not have access to employer-sponsored retirement plans. “I look forward to working with businesses, advocacy groups, and other stakeholders to implement a program that works for all Vermonters,” she said.
The committee that advised the legislature on the bill recommended a three-year check-in after the start of the program, when an analysis of participation and potential strategies to increase participation would take place. The program is expected to be implemented in January 2019.
The program will initially be supported by fees that would be paid by the program’s participants, but allows for the possibility for employer contributions in the future. It also said that until sufficient assets have been accumulated, program costs will exceed revenues during the startup phase.
The Treasurer’s Office will have financial service providers subsidize the startup cost in exchange for a longer-term contract, essentially loaning its own capital to the program. If the committee determines that additional financial support is necessary for start-up and/or ongoing costs, the Treasurer will inform the general assembly prior to any decision on implementation.
Photo by: cglade