A new program for Colorado workers who don’t have access to a 401(k) or other retirement plan at their job has officially launched after years in the making.
The Colorado SecureSavings program was designed to help nearly 1 million workers with no retirement plan to start one at no cost to the employer. Companies with existing plans must be exempted by the state. Others with at least five employees must enroll in what state Department of Treasury officials called a “10- to 15-minute” process.
“This is about how (to help workers in) Colorado sustainably retire with dignity on their own terms,” state Treasurer Dave Young said. “Instead of being tied to an employer, like a traditional retirement plan, the Colorado SecureSavings Program travels with the employee (to a new job). … This allows small- and medium-sized businesses a broader compensation package.”
SecureSavings essentially sets up a Roth Individual Retirement Account for the worker and is open to all-sized businesses, including the self-employed, gig workers and farm laborers. After an employer enrolls, their workers are added to the portal so they can then choose to opt out or stick with it. After 30 days, 5% of a worker’s paycheck after taxes is deducted and placed into the retirement account. Vestwell Holdings manages the program for the state while BlackRock and State Street Global Advisors manage the investments.
The first notices to employers about the program’s launch were sent Jan. 11. So far 129 employers have enrolled while 226 were ruled exempt because they either had an existing plan, had fewer than five employees or aren’t defined as employers under the statute, Sheena Kadi, communications director for the Department of Treasury, said in an email.
“Our data shows that approximately 115,000 businesses fall under the requirements, and will either need to enroll or facilitate a private option. We have already trimmed our list down based on who we know has an existing plan, and will be sending notices to about 85,000 employers at multiple points throughout the year,” Kadi said.
On Wednesday, a treasurer’s office news conference featured two employers involved in the 25-employer pilot program, which started in October. They said their workers welcomed it.
“We had looked at a 401(k) program for our staff for years and every time I asked for bids, the bids came back incredibly expensive — thousands to enroll in a program and thousands every year to administer the program. And that wasn’t possible for us,” said Chrissy Strowmatt, general manager for Blue Bonnet Restaurant in Denver. “We wanted to be part of the pilot so we could get in as quickly as possible. … Most of my employees are long-term employees and have been needing something like this for a very long time.”
“For a lot of people, this is going to be a life-changing bill,” said Kerry Donovan, a former state senator from Vail who was also the bill’s prime sponsor. “We know by looking at national studies and Colorado trends that many people have less than a year’s worth of savings in their account. And in other nonprofit work I do, I see people that have savings of $60, of $45. … This is a game changer. People can set aside that 2% or 3% or more if they want and have confidence that they will have professionals managing that money in a smart and responsible way.”
Source : The Colorado Sun
