Delaware Gov. John Carney signed a bill into law Thursday that establishes a state-run retirement program for workers who don't have access to an employee-sponsored retirement plan.
The legislation, known as the Delaware EARNS (Expanding Access for Retirement and Necessary Savings) Act, requires businesses with more than five employees that don't offer a retirement plan to participate in the program.
"For small businesses and the almost 150,000 Delaware workers lacking an employer-sponsored saving program, the Delaware EARNS program will be financially transformative, allowing residents to save for the future while filling a critical need in the marketplace," said state Rep. Larry Lambert, who sponsored the legislation, in a news release on Thursday.
Mr. Lambert introduced the EARNS Act in the state Legislature in May 2021, and it passed the House in May of this year. The Delaware Senate passed the bill in June.
Qualified employees who do not opt out will be automatically enrolled in the program at a default contribution rate of no less than 3% and no more than 6%, according to the legislation. Employees should be able to participate in the retirement plan and begin making contributions by Jan 1, 2025.
The law also establishes a board of seven members to "oversee the design, implementation and initial administration of the program," though the board is set to disband by Dec. 31, 2025, and transfer its duties to a Plans Management Board.
"The pandemic has shown how vital it is for Americans to have savings to depend on," said AARP Delaware State Director Lucretia Young in a news release on Thursday. "We must make it easier for workers to save so they can take control of their future. AARP was pleased to work alongside our State Treasurer to help provide an easy pathway for workers to start building a safety net and grow the savings they need for a more secure future."