Sen. Vitelli, AARP Maine, State Treasurer Beck, Attorney General Frey, and Maine Small Business Owner Celebrate new Work and Save Program
AUGUSTA — On Wednesday, Oct. 13, Sen. Eloise Vitelli, D-Arrowsic; Noël Bonam, AARP Maine State Director; State Treasurer Henry Beck; Attorney General Aaron Frey; and Ben Edwards, Managing Partner of Schoppee Farm spoke at a virtual event to celebrate the passage this year of LD 1622, “An Act To Promote Individual Retirement Savings through a Public-Private Partnership,” which will help more Maine workers save for retirement.
“My career with New Ventures Maine was dedicated to helping Mainers gain financial literacy and build savings,” said Sen. Eloise Vitelli. “The Work and Save Program puts that objective into action on a statewide scale in Maine and will help folks save for retirement, help small businesses offer a new benefit in recruiting employees, and save the state money in the long run. It’s a win-win-win.”
LD 1622 creates the Maine Retirement Savings Program, 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 eight other states have — or have passed legislation for — similar programs.
According to data from the Georgetown Center for Retirement Initiatives, 207,000 Mainers 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.
“AARP Maine is proud to celebrate the new Work and Save law which passed with strong bipartisan support this session,” said Noël Bonam, AARP Maine State Director. “Until now, too many working Mainers have had no access to a retirement savings program at work, but this law will enable more Mainers to automatically save for a more secure financial future, with no responsibility or burden on the employer or business owner. On behalf of our 218,000 members in the state, AARP Maine is thankful for State Senate Majority Leader Eloise Vitelli’s leadership, the Maine legislature for recognizing the value and importance of this new program, and our volunteer advocates and small business owners who stepped forward to support this straight-forward, beneficial legislation.”
Over the coming months, the Governor will appoint and the Senate will confirm members of the Maine Retirement Savings Board to oversee and implement the program. State Treasurer Henry Beck, who will serve on the board and staff the program, has been a longtime supporter of the program and sponsored earlier iterations of the legislation as a State Representative and Chair of the Insurance and Financial Services Committee.
“Promoting private retirement savings is good for the State’s fiscal position,” said State Treasurer Henry Beck. “When Mainers earn and then save dollars for retirement, that can reduce expenditures for certain programs and increase revenues from economic activity. It is important to note that while this program includes automatic enrollment, it is voluntary. Maine employers that already offer a retirement program, as many do, will not need to participate and no employer will be required to match contributions.”
A 2017 report published by the Margaret Chase Smith Policy Center at the University of Maine found that increasing Mainers’ retirement income through stronger retirement savings dramatically reduces the need for taxpayer funded safety nets and public assistance. The program could ultimately save the state budget millions of dollars in the coming decades as current workers enter their retirement years, and is designed to be self-funding after the initial implementation.
“When Senator Vitelli shared with me her plan for this public-private retirement savings program, I was convinced of how significant a tool this could be to stimulate retirement savings for individuals across our state,” said Attorney General Aaron M. Frey. “I was so impressed that I agreed to make available the upfront funding needed to get the Maine Work and Save Program off the ground. The Office of the Attorney General had secured funds through a legal settlement that held a national financial institution accountable for its role in contributing to the economic crisis of 2008. So many Mainers took a financial hit during that crisis, including to their retirement savings plans. The fact that this money is available to be directed at a program that will improve the ability for Mainers to plan for a more financially secure retirement is both meaningful and important.”
“Starting a new business is unpredictable and our experience was no different,” said Ben Edwards, Managing Partner at Schoppee Farm based in Machias. “At the same time we still want to provide strong benefits for our employees, and LD 1622 will help us do just that. We love how simple the program is and how it’s designed to build on Mainers’ independent spirit and proud work ethic, while reminding us that part of any community’s secure future includes simple ways for all individuals to save for their futures, no matter what they do for a living.”
“This private-public partnership is a win for all concerned,” said former senior U.S. Treasury official Mark Iwry, now with the Brookings Institution in Washington, D.C., who has played a leading role in designing and advancing the nationwide initiative to involve the states in expanding private-sector retirement saving. “Workers get an easy way to save in private-sector IRAs at the workplace; small businesses earn employees’ appreciation without contributing a dime, by simply letting them use the employer’s payroll system to save; taxpayers save millions through lower public assistance costs in future years; and, as a byproduct of this effort, the financial services industry gets more assets under management and sells more 401(k) plans.”
The new law will go into effect Monday, Oct. 18, 2021.