Rhode Island lawmakers have passed legislation to establish a state-facilitated retirement savings program for private-sector workers without access to workplace plans.
Under the legislation, employers with five or more employees will be required to enroll their workers in the RISavers retirement savings program if they don’t offer a workplace plan themselves.
The legislation passed in the Senate on June 11 in a 35–1 vote and in the House on June 12 in a 64–8 vote. The bill now heads to Gov. Daniel McKee for his signature.
Angela Antonelli, research professor and executive director of Georgetown University Center for Retirement Initiatives, applauded Rhode Island lawmakers for their leadership on the bill.
“Today, all New England, except for New Hampshire, has adopted a state savings program,” she said in a LinkedIn post.
The Rhode Island program is structured as an automatic IRA, meaning employees will be automatically enrolled in a payroll-deduction individual retirement account. All employers without workplace plans must have a payroll deposit arrangement in place to allow employee participation in the program within 36 months after it opens for enrollment or face penalties.
Rhode Island joins 16 other states that have established — or enacted legislation to establish — similar auto-IRA programs.
The three largest programs — CalSavers in California, Illinois Secure Choice and OregonSaves — have accumulated $1.2 billion in assets as of Jan. 31, according to information on the Georgetown University Center for Retirement Initiatives’ website.
Such programs can make a big difference for financially vulnerable people without sufficient retirement savings, according to Pew Charitable Trusts, which commissioned a report assessing the impact of insufficient saving on state and federal budgets.
The report found that insufficient retirement savings could cost state and federal governments $1.3 trillion over the next 20 years to fund public assistance programs for financially vulnerable retiree households. In Rhode Island, insufficient savings were projected to cost the state $456 million while devouring $3.1 billion from the federal budget.
