Give all employees access to retirement savings accounts

Bill would allow all employees to tap into individual retirement accounts

WITH PRICES of groceries, gas, housing, and other necessities around the country still higher than they’ve been in previous years, our state’s residents are facing substantial, and often insurmountable, economic challenges. As a result, Massachusetts residents (especially those with low income) are being forced to choose between paying for their basic daily needs and saving toward a secure financial future – something all American workers deserve access to, regardless of their employment status or income level.In response to these growing financial concerns, Massachusetts is taking promising steps toward a solution. The Massachusetts Secure Choice Savings Program Act would establish an automated savings program that would automatically enroll workers in an individual retirement account (IRA) in which a portion of their wages would be set aside every pay period. Our proposed legislation would help approximately 1.2 million workers in communities across the state, who currently lack access to a savings plan at work, begin to build a reliable retirement fund.Like other employer-based retirement plans, this program still allows workers to maintain control over their financial futures by relying on employees’ voluntary regular payroll contributions to fund their IRA. Along with the freedom of choosing when and how much they contribute, individuals can always decide to opt out of the program. And, since IRA contributions are made after tax, participating employees can access their funds in cases of financial emergencies or setbacks without the fear of steep penalties that accompany other retirement savings programs.Additionally, by helping people increase their personal savings, this bill will ease the burden faced by taxpayers to fund expensive government assistance programs that people may turn to if and when they find they have insufficient retirement savings of their own. By enabling workers to gain more financial independence, the Massachusetts Secure Choice Savings Program Act will help keep individuals on track for a comfortable retirement and support the fiscal health of our entire state.As workers build their personal wealth and taxpayers save money in financial assistance programs, employers and small businesses will also benefit by avoiding the significant burden associated with starting their own retirement plans. As legislators representing Gateway Cities in the Commonwealth, we know most small businesses can’t afford their own plans due to high startup costs and a lack of administrative capacity. Instead, the Massachusetts Secure Choice Savings Program would be professionally managed by a third-party financial firm overseen by the Commonwealth, enabling businesses to participate in the program with no costs or opt out by adopting their own retirement plan at any time.

If Massachusetts enacts this legislation, it will join 15 other states that have passed similar laws known as “auto-IRA” or “work and save” programs, including California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Minnesota, Nevada New Jersey, New York, Oregon, Virginia, and Vermont. Although some of these state programs are relatively new, over 700,000 savers in Oregon, Illinois, California, Connecticut, Maryland, and Colorado have already amassed nearly $1 billion in assets since 2017.Despite working hard throughout their lives to provide for themselves and their families, many individuals – particularly those who work in low-wage jobs – may find that they are not prepared when the time comes to retire. The Massachusetts Secure Choice Savings Program Act is designed with these individuals in mind – those who want and deserve the opportunity to build a secure retirement.

Sal DiDomenico is a state senator from Everett and Paul Donato is a state representative from Medford.