Committee approves Vitelli bill to help Mainer workers plan for secure, independent retirement

Posted: March 13, 2020 | Health Coverage, Insurance and Financial Services, Senator Vitelli

AUGUSTA — A bill from Assistant Senate Majority Leader Eloise Vitelli, D-Arrowsic, on Wednesday received strong support from the Legislature’s Health Coverage, Insurance and Financial Services Committee. LD 594, “An Act To Promote Individual Savings Accounts through a Public-Private Partnership,” would help more Maine workers plan and save for a secure and independent retirement. The committee voted 7-4 in favor of the bill.

“If you work hard your whole life, you should be able to enjoy a financially independent retirement. But for far too many workers in our state, that goal is out of reach,” said Sen. Vitelli. “I’m grateful to the committee for their support of this bill. We have a real chance to turn the tide to help hardworking Mainers plan and save for the retirement they deserve.”

As amended, LD 594 would ensure Maine workers who do not currently have a retirement savings plan at work, can save for retirement through their paycheck with a state-facilitated retirement savings program. The goal of the program is to encourage savings, so employees would have to opt out of the program but could do so at any time. This gives workers the flexibility of choosing whether to save through their paycheck, while also making it as easy as possible for them to participate in the program. Research shows that workers are about 15 times more likely to contribute to a retirement saving account if a program is offered through their employer.

“A secure retirement is out of reach for thousands of working Mainers, especially those who work for themselves or small businesses,” said Pat Pinto, volunteer state president for AARP Maine, in testimony supporting the bill. “On average, Maine working households have less than $2,500 in retirement savings.  As the oldest state in the nation, Maine can, and must, do better.  We should be the state that sets the example of how to build strong financial security later in life.”

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. Pinto testified that Social Security is the only source of retirement income for 30 percent of Maine retirees, and the average monthly benefit is approximately $1,300.

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 pre-retirement savings can substantially reduce the need for taxpayer contributions for public assistance.”

LD 594 now faces votes before the Maine Senate and House.