Montpelier, VT - State Treasurer Mike Pieciak held a press conference on Tuesday morning alongside Senators Kesha Ram Hinsdale (D) and Randy Brock (R), from the Senate Committee on Economic Development, Housing and General Affairs, and Greg Marchildon, State Director for AARP Vermont. Together, they introduced the Treasurer’s VTSaves public retirement initiative. Senator Brock will present the bill on the Senate floor this week as S.135, after passing out of committee with unanimous support.
Most Americans, including Vermonters, have inadequate personal retirement savings. This is particularly true for those who are self-employed or who work for small employers that lack access to convenient, automatic retirement savings. “40% of Vermont private-sector employees work for a business that does not offer a workplace plan. Having access to payroll deduction makes people 15 times more likely to save, yet over 88,000 Vermont workers can’t save for retirement out of their regular paycheck,” noted Marchildon, of AARP.
VTSaves is an auto-IRA program that provides employees not currently covered by a workplace retirement plan access to one at no cost to their employers. Employers who do not already have a workplace retirement plan are required to sign up and their employees are automatically enrolled into a Roth IRA with automatic payroll deductions. Employees can opt out of the program and always have access to any principal they put into their IRA without tax or penalties.
“We believe that 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,” said Treasurer Pieciak.
Twelve other states have enacted similar auto-IRA programs. Those states report that 70% to 75% of eligible employees participate in the program with average annual contributions of approximately $2,000. Savers in those programs have already accumulated over $735 million in assets. “I am thrilled to work with legislators and, advocates, and the business community to offer that opportunity to Vermonters as well,” said Treasurer Pieciak. “And it is not a moment too soon to get a program like this up and running.”
In 2027, the federal government will enact a revised “Savers Match” that will allow a federal match of up to $2,000 for lower wage earners who are saving for retirement. VTSaves would make tens of thousands of Vermonters eligible for this critical federal retirement incentive.