The Vermont Senate on Thursday passed a bill to establish a state-facilitated retirement savings program for workers whose employers don't offer a workplace retirement plan.
Under the proposed legislation, employers with five or more employees will be required to enroll their workers in the VTSaves program or face penalties.
The program is structured as an automatic IRA, meaning employees will be automatically enrolled in a payroll deduction individual retirement account. VTSaves will automatically enroll workers at an initial 5% deferral rate but will give them the option to opt out of the program or contribute at higher or lower rates.
"We believe the VTSaves program will be transformational for Vermonters' long-term financial well-being, providing them with the dignity and security they envisioned in retirement and may help them avoid having to rely on state and federal public benefits to get by," Vermont Treasurer Mike Pieciak said in a news release.
Employers with more than 25 employees will be required to offer VTSaves by July 1, 2025. Those with 15 to 24 employees must make the program available by Jan. 1, 2026, and those with five to 14 employees must do so by July 1, 2026.
Employers that fail to meet these deadlines face penalties ranging from $10 to $75 per employee.
Twelve other states, including California, Illinois and Oregon, have enacted similar auto-IRA programs, which collectively have accumulated more than $735 million in assets, Mr. Pieciak said.
"I am thrilled to work with legislators and the business community to offer that opportunity to Vermonters as well," Mr. Pieciak said.