Senate enacts Sen. Vitelli bill to help more working Mainers save for retirement

AUGUSTA — On Thursday, the Maine Senate voted to enact a bill from Sen. Eloise Vitelli, D-Arrowsic, to help more Maine workers save for retirement. LD 1622, “An Act To Promote Individual Retirement Savings through a Public-Private Partnership,” received bipartisan, unanimous support.

“I spent my career of 38 years at New Ventures Maine, helping Mainers start their own small businesses and become financially self-sufficient. Upon my retirement, I was able to draw on my retirement savings, which I built through my employer-sponsored program. I’m lucky; most Mainers do not have enough saved for retirement, and are not positioned to have the stable and relaxing retirement they envision for themselves. This bill would change that, to help more hardworking Mainers easily save and plan for their retirement,” said Sen. Vitelli. “I want to thank everyone who worked on this bill to make it as strong as possible, to help workers, businesses and our overall economy.”

As amended, LD 1622, the Work and Save bill, would create 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 do not contribute any matching 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.

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.”

“In 2020, 34 percent of our tax filers indicated that saving for retirement is one of their top three financial goals and 32 percent identified that saving for retirement is a challenge. Many of these tax filers work for employers that do not offer a retirement savings program. These individuals are also balancing other financial demands, like saving for unexpected expenses and other goals, and would benefit from a retirement savings program that would make it easier for them to save, like the plans offered by many large employers,” said Janet Smith, with CA$H Maine, in testimony supporting the bill.

“More than a third of Mainers who are over 65 live on Social Security benefits alone, without any retirement savings. The average annual Social Security income for these Mainers is $18,000. This is just about 140 percent of the Federal Poverty Level and is not enough income for these people to meet their basic need,” said Torey Steward with the Maine Council on Aging, in testimony supporting the bill. “While many of these people will need to make significant repairs to their homes and pay out of pocket for health care and home care, they will not be able to afford these expenses.”

LD 1622 is also supported by the Maine State Attorney General, Maine State Treasurer, AARP Maine, Maine Women’s Lobby, Maine Association of Retirees, and Disability Rights Maine.

LD 1622 now goes to the desk of Gov. Janet Mills, who has 10 days to either sign it into law, veto it or allow it to become law without her signature.