Montpelier, VT – On June 1, VT Gov. Phil Scott signed Treasurer Mike Pieciak’s public retirement initiative proposal, VT Saves (S.135), into law. Passed unanimously by the VT House and Senate, the program requires employers not already offering a retirement plan to sign up for VT Saves, establishing a Roth IRA for their employees with automatic payroll deductions. The program is of no cost to the employer, and employees can opt out of the program at any time.
“VT Saves will transform the long-term financial well-being of tens of thousands of Vermonters. We know that employees are 15 times more likely to save for retirement when they have access to a plan, which will help more people have a secure retirement, benefit our economy, and take pressure off our state budget,” said Treasurer Pieciak. “I want to thank the Governor and the legislature for their bipartisan support of VT Saves and helping address Vermont’s retirement crisis.”
Gov. Scott appreciated the bipartisan approach to tackling this important issue. “Ensuring that Vermonters are able to plan ahead and retire comfortably in our state is critical,” said Gov. Scott. “I appreciate Treasurer Pieciak for taking the lead on this issue and for his bipartisan work to launch VT Saves.”
Senators Kesha Ram Hinsdale and Randy Brock echoed support for VT Saves’ potential impact.
“This program is a win for all Vermonters,” said Sen. Ram Hinsdale. “Individuals will be able to conveniently and safely save for retirement, small businesses will not have to get into any guesswork to help facilitate employee financial well-being, and there will be fewer seniors in need of taxpayer assistance as they age. I was proud to work with Treasurer Pieciak to advance this valuable initiative that will create a tide to lift all boats.”
“VT Saves is a new and valuable tool that will help Vermonters achieve financial security,” said Sen. Brock. “It is a voluntary program that is low in cost, saves both participants and the state money, and has a proven track record of success in other states.”
Modeled after successful programs in other states, participating employees are automatically enrolled in a Roth IRA with the default of a 5 percent payroll deduction that escalates by 1 percent annually with an 8 percent cap. An employee can opt out of the program, change their contribution rates, and choose their investments.
In states with similar programs and high participation rates, individuals on average have saved nearly $2,000 annually toward retirement. If Vermont sees similar results, account balances could total over $1 billion in retirement savings after the first 10 years, with no added ongoing cost to employers or Vermont taxpayers.
Treasurer Pieciak thanks the legislative champions including, Sen. Kesha Ram Hinsdale, Sen. Randy Brock, Sen. Ann Cummings, Rep. Mike McCarthy, and Rep. Matt Birong, for helping drive this important initiative across the finish line. The Treasurer also thanks AARP Vermont, Vermont Businesses for Social Responsibility (VBSR), and members of the business community for their support.
The Treasurer’s Office will hire a Director of VT Saves to begin engaging with the business community to operationalize the program. VT Saves will take effect in 2025.