Gov. Janet Mills signed into law a bill from Sen. Eloise Vitelli, D-Arrowsic. LD 1622, “An Act To Promote Individual Retirement Savings through a Public-Private Partnership,” will help more Maine workers save for retirement.
“We’re long past the days when the majority of retirees could rely on a pension to carry them through their golden years. Right now, more than a third of Mainers over retirement age rely solely on Social Security for income. While larger employers often offer retirement savings plans, many people who are self-employed or employed by small businesses don’t have the same easy way to save and plan for their retirement,” said Sen. Vitelli. “With this new law, we’ll close that gap, helping more hardworking Mainers prepare for a comfortable retirement, and in the long-run, help the state save millions in valuable taxpayer dollars.”
As amended, LD 1622, the Work and Save bill, would create the Maine Retirement Savings Program, a way for working Mainers to contribute to a Roth IRA directly from their paycheck. Employers who don’t offer their own retirement savings plans will facilitate a deduction for their employees, straight from their paycheck. These employers cannot contribute any funds to the plan. The deducted funds go into a Roth IRA, following participants from job to job until that person is ready to retire. At least six other states have similar programs.
According to data from AARP, approximately 46 percent of private-sector workers in Maine — about 235,000 people — do not have access to an employer-sponsored retirement savings program. Nationally, 26 percent of working-age adults say they have no retirement savings at all.
A 2017 report published by the Margaret Chase Smith Policy Center at the University of Maine states that, “Inadequate savings for retirement creates fiscal costs due to increased elderly reliance on public assistance … Simulations show that increasing retirement income through greater preretirement savings can substantially reduce the need for taxpayer contributions for public assistance.”
“Retirement savings in Maine is in crisis and the pandemic has made it worse,” said Pat Pinto, Volunteer President of AARP Maine, in testimony supporting the bill. “More than 207,000 Maine workers aged 18 to 64 have no access to a retirement savings program. Few of these employees save on their own and when they do, they save less than $2,500 towards retirement. According to the Maine Department of Labor, during the Covid-19 pandemic, Maine lost more jobs on a percentage basis than in any recession in the past 50 years. This means even more Mainers facing deeper retirement savings deficits and more workers with only Social Security to fall back on when they reach retirement age. This important bill will benefit working Mainers as well as small and medium-sized businesses for generations to come.”
LD 1622 also is supported by the Maine State Attorney General, Maine State Treasurer, CA$H Maine, Maine Council on Aging, Maine Women’s Lobby, Maine Association of Retirees, and Disability Rights Maine.
The new law will go into effect 90 days after the Legislature adjourns sine die.