Congress threatens retirement program
Less than a year ago, the Maryland General Assembly and Gov. Larry Hogan passed the innovative bipartisan Small Business Retirement Savings Program and Trust (“Work and Save”), offering retirement security for more than 1 million Marylanders who currently have no employer-based plan.
The Work and Save program operates much like a 529 college savings plan, allowing workers who do not have access to 401(k)s or other federal plans to have money deducted from their paychecks and placed in a retirement account intended to supplement Social Security.
The passage of Work and Save put Maryland at the forefront of a national effort among states to take advantage of a 2016 Department of Labor rule which made the plan possible. The rule is clear: small-business owners do not operate these plans. Their only interaction is to provide information to employees and run the payroll deduction (which they are already doing to remit taxes). Since the passage of the rule, seven states — California, Connecticut, Illinois, Maryland, New Jersey, Oregon and Washington — have enacted such laws, and more than 20 other states and cities are in the process of doing so.
But today, federal government overreach is threatening to sabotage Maryland’s ability to provide simple and cost-effective retirement solutions to their citizens. The House of Representatives passed resolutions repealing the guidelines that make the program possible, and the Senate is considering doing the same. These resolutions are opposed by AARP and a broad group of bipartisan state lawmakers.
We know from our extensive research that workers are 15 percent more likely to save for retirement when they have access to a workplace based plan. We also know that those who do not save enough for retirement risk becoming dependent on social safety net programs down the line. In fact, states taking action today could save taxpayers as much as $4.8 billion in the next 10 years.
AARP Maryland urges Congress to listen to the voters and oppose these resolutions: eight in 10 private-sector employees across party lines agree elected officials should do more to make it easier for small businesses to provide retirement plans to their employees.