Small Business Retirement Plan Passes
Vermont Business Magazine - In its final hours Thursday, the Legislature voted to approve S135, Vermont’s economic development omnibus bill. Section C of the bill sets up a secure public retirement option, the “Green Mountain Secure Retirement” plan, for small businesses. Pending due diligence by the Treasurer’s office, the goal is to implement the retirement plan by January 15, 2019.
The program was proposed by Treasurer Beth Pearce’s Public Retirement Study Committee(link is external), which recommended a Multiple Employer Plan (MEP) for the plan’s design. The MEP will be open to any employer with fewer than 50 employees that does not currently provide a retirement plan to its employees. This program makes a secure, vetted retirement option available to Vermont’s small employers.
Treasurer Pearce made the following statement: “I want to applaud the General Assembly on the passage of S135 and the enabling legislation to create the ‘Green Mountain Secure Retirement Plan.’ The Senate Committee on Economic Development, Housing & General Affairs; the House Committee on Commerce & Economic Development; and the House Committee on Government Operations were particularly instrumental in their support, leadership, and careful vetting to make this bill a reality. I also want to thank the Scott Administration for their support of this bill as well as the members of the Public Retirement Study Committee.
“Every Vermonter deserves an opportunity for a lifetime of financial wellbeing. The passage of this bill will allow the State to make substantive steps towards implementing a voluntary retirement program for Vermonters who currently lack access to employer-sponsored retirement plans. This program will broaden the opportunity for more Vermonters to be better prepared for retirement and in doing so strengthen the economic vitality of our State. I want to praise the broad group of Legislators from all parties in the House and Senate and stakeholder groups who worked together to create this bill.
“The bill is a culmination of three years of study overseen by my office with the Public Retirement Study Committee. Today 104,000 Vermonters do not have access to employer-sponsored retirement plans. I look forward to working with businesses, advocacy groups, and other stakeholders to implement a program that works for all Vermonters.”
Forty-five percent(link is external) of working Vermonters do not have access to a workplace savings plan. Those with access to a workplace retirement savings plan are considerably more likely to save(link is external), than those without. Vermont’s 2016 Public Retirement Study Committee Report recognized the impact an increase in individuals of retirement age with no retirement saving will have on the state budget and social service programs.
The committee agreed that reliable and adequate income in retirement is not just good for the individual, but also has a positive impact on the health of Vermont’s economy.
“Most small businesses do not have the investment experience or time to research available private retirement plans and make a decision about which plan is the best choice for their employees,” said Lindsay DesLauriers, State Director of Main Street Alliance and a member of that committee. “The MEP will enable employees of small businesses and small business owners themselves the opportunity to work toward economic security later in life through secure retirement savings.”
One of the goals of the plan is that it does not compete with established private options. The Treasurer’s office also must make sure it complies with established state and federal laws.
“Green Mountain Secure Retirement will lead to greater economic security for more Vermonters, including small business owners, and a healthier state economy for all,” said DesLauriers.
Green Mountain Secure Retirement bill
As passed S135:
The Plan shall:
(1) be available on a voluntary basis to:
(i) with 50 employees or fewer; and
(ii) that do not currently offer a retirement plan to their employees; and
(B) self-employed individuals;
(2) automatically enroll all employees of employers that choose to participate in the MEP;
(3) allow employees the option of withdrawing their enrollment and ending their participation in the MEP;
(4) be funded by employee contributions with an option for future voluntary employer contributions; and
(5) be overseen by a board:
(A) that shall:
(i) set program terms;
(ii) prepare and design plan documents; and
(iii) be authorized to appoint an administrator to assist in the selection of investments, managers, custodians, and other support services; and
(B) that shall be composed of seven members as follows:
(i) an individual with investment experience, to be appointed by the Governor;
(ii) an individual with private sector retirement plan experience, to be appointed by the Governor;
(iii) an individual with investment experience, to be appointed by the State Treasurer;
(iv) an individual who is an employee or retiree, to be appointed by the State Treasurer;
(v) an individual who is an employee advocate or consumer advocate, to be appointed by the Speaker of the House;
(vi) an individual who is an employer with 50 employees or fewer and who does not offer a retirement plan to his or her employees, to be appointed by the Committee on Committees; and
(vii) the State Treasurer, who shall serve as chair.
(C) that shall, on or before January 15, 2020 and every year thereafter, report to the House and Senate Committees on Government Operations concerning the Green Mountain Secure Retirement Plan, including:
(i) the number of employers and self-employed individuals participating in the plan;
(ii) the total number of individuals participating in the plan;
(iii) the number of employers and self-employed individuals who are eligible to participate in the plan but who do not participate;
(iv) the number of employers and self-employed individuals, and the number of employees of participating employers. who have ended their participation during the preceding 12 months;
(v) the total amount of funds contributed to the Plan during the preceding 12 months;
(vi) the total amount of funds withdrawn from the Plan during the preceding 12 months;
(vii) the total funds or assets under management by the Plan;
(viii) the average return during the preceding 12 months;
(ix) the costs of administering the Plan;
(x) the Board’s assessment concerning whether the Plan is sustainable and viable;
(xi) once the marketplace is established: (I) the number of individuals participating; (II) the number and nature of plans offered; and (III) the Board’s process and criteria for vetting plans; and (xii) any other information the Board considers relevant, or that the Committee requests.
(D) for attendance at meetings, members of the Board who are not employees of the State of Vermont, and who are not otherwise compensated by their employer or other organization, shall be reimbursed at the per diem rate set in 32 V.S.A. § 1010 and shall be reimbursed for mileage and travel expenses.
The State of Vermont shall implement the “Green Mountain Secure Retirement Plan” on or before January 15, 2019, based on the recommendations of the Public Retirement Plan Study Committee as set forth in 2016 Acts and Resolves No. 157, Sec. F.1.