(Host) State Treasurer Jeb Spaulding has teamed up with lawmakers to propose a statewide voluntary retirement savings program.
The idea is to use the resources and expertise of the state’s retirement plan to help small businesses set up programs for their employees.
VPR’s John Dillon reports:
(Dillon) Spaulding says there’s a tremendous need for the savings program, because Americans simply aren’t setting enough money aside for their retirement.
About half the workforce is not covered by any retirement savings plan. The problem is especially acute in Vermont, because the state has many small businesses that offer no formal retirement benefit. And that, Spaulding says, could mean trouble for the state budget down the road.
(Spaulding) “To the extent that people don’t save enough for retirement they’re going to be putting pressure on taxpayer supported services. So to the extent that we can do something about this issue in a proactive fashion, we will be doing the taxpayers and individual Vermonters a tremendous service.”
(Dillon) The Vermont proposal calls for a voluntary retirement savings program for employers, employees, and self-employed people.
The plan would allow the private sector to take advantage of the money-management services the state already gets from firms that handle public retirement funds.
The businesses would then have the option of providing a pre-tax, payroll deduction type retirement plan for their workers.
(Spaulding) “We can actually piggyback on all the work that’s already done. The key is offering small businesses on a voluntary basis, and employees on a voluntary basis, to access a simple, high-quality, safe retirement plan.”
(Dillon) The new program would not mingle private retirement funds with existing public sector funds.
Spaulding said taxpayers would not pay for the program. Administrative costs would be covered in the fee charged to plan participants.
Joining Spaulding in announcing the plan were at the news conference were four lawmakers, representing the Progressive, Republican and Democratic parties.
Representative Donna Sweaney, a Windsor Democrat, said women are vulnerable because they often lack retirement benefits.
(Sweaney “The folks who are going to be suffering in the future who have not saved, who think they can live on their Social Security benefits, are women. And it’s a very serious issue for women and poverty.”
(Dillon) The new program requires legislation before it can take effect. The lawmakers plan to sponsor the bill next year. They plan to spend the summer and fall working with the public and businesses to promote the concept.
For Vermont Public Radio, I’m John Dillon in Montpelier.