Time marches on — and so does the availability of coverage for private-sector employees. Or at least the potential availability, as legislation in two states is progressing and now another state is in the mix.
Mississippi
Legislation that would create the Mississippi Work and Save Program is moving quickly. Sen. J. Walter Michel (R-Hinds, Madison) introduced it on Jan. 19. Senate Bill 2912 was referred to the Finance Committee of the Mississippi Senate.
That committee wasted little time; just 15 days later, it recommended that the bill be passed. One day, later, Feb. 4, the full Senate took the committee’s advice and did exactly that and passed Senate Bill 2912 without a single “no” vote.
The fate of Mississippi Work and Save is now in the hands of the Mississippi House of Representatives. That body received it on Feb. 5; on Feb. 6 it was referred to two House Committees: (1) State Affairs, and (2) Accountability, Efficiency, Transparency.
The bill would provide coverage for individuals who are are at least 18 years old and are employed by private-sector employers that do not themselves offer a retirement plan. Eligible employees would be automatically enrolled, but would be able to opt out. They would contribute to a Roth IRA through payroll deduction that would have a target date fund investment.
Utah
Private-sector employees in Utah are one step closer to being able to avail themselves of a new savings vehicle that would facilitate preparing for retirement.
House Bill 250 takes a rather unique approach. The bill, which Rep. Joseph Ellison (R-Washington) introduced on Jan. 20, would direct the state treasurer’s office to establish and maintain a publicly accessible online exchange through which an eligible private employer may review, compare, and select one or more retirement plans in which their employees could participate.
The bill also would set forth requirements for the exchange, including:
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- the types of available retirement plans;
- the manner in which the exchange presents the retirement plan options; and
- the information available for each retirement plan.
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It also would provide a process by which a retirement plan provider can list a qualified retirement plan on the exchange.
The legislation is moving quickly. The House Economic Development and Workforce Services Standing Committee on Jan. 30 voted in favor of the bill. The House of Representatives passed the bill on Feb. 10 in a 71-1 vote, with three abstentions. It was referred to the Senate on the next day.
Kansas
Private-sector employees in Kansas whose employers do not offer them a retirement plan would obtain coverage through the Kansas Empowerment Savings Program if legislation now before the state House of Representatives is enacted.
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While the program is called the Kansas Empowerment Savings Program, that’s terminology that describes what its supporters intend it to be. The program would establish a state-run auto-IRA.
The Committee on Financial Institutions and Pensions introduced HB 2649, the legislation that would establish the Kansas Empowerment Savings Program, on Feb. 3.
Employers. HB 2649 would require private-sector, for-profit employers with five or more employees, that have been in business for at least a year, and that do not offer a retirement plan to participate in the program.
Employees. Employees who are at least 18 years old and have been employed by their employer for at least 90 days would be eligible for coverage by the program. Employees would have the right to opt out of participating in the program. They also could change the contribution level.
Account type. Through the program, employees would contribute to an automatic enrollment payroll deduction IRA.
Contribution level. The bill provides that the default payroll deduction contribution rate would be 5% of compensation.
Governance. The program would be run by a body the bill would create, the Kansas Empowerment Savings Program Board of Trustees. The board would have seven voting members:
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- the state treasurer or the state treasurer’s designee;
- the executive director of the Kansas public employees retirement system or the executive director’s designee;
- three members of the public — one appointed by the governor, one appointed by the president of the senate and one appointed by the speaker of the house of representatives, who have expertise in investment or retirement savings plan administration;
- one member appointed by the governor who would represent employers; and
- one member appointed by the state treasurer who would represent the interests of employees or program participants.
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The bill calls for the board members to be appointed as soon as practicable on or after July 1, 2027.
Interconnection. The bill would allow the board to enter into intergovernmental agreements with the secretary of state, department of revenue, department of labor and any other state agency that the board deems appropriate. It also would allow the board to coordinate with the efforts of other states in this regard.
Effective date. If the bill is enacted, it will go into effect on July 1, 2027.
Status. HB 2649 is before the Committee on Financial Institutions and Pensions.
Finding out More
The text of Senate Bill 2912 is available here.
The text of House Bill 250 is here.
The text of House Bill 2649 is here.
