THE ISSUE: State lawmakers continue to consider legislation that would establish state-run retirement plans for private sector
workers and require certain employers to auto-enroll their employees in these plans. these plans would directly compete with
existing private market programs that already offer consumers a robust variety of retirement options.
BACKGROUND: In recent years both media and policymaker attention has focused on the fact that a large percentage of
workers are not saving nearly enough for retirement. Due to the belief that there exist significant gaps in employee access to
employer-based retirement plans, many states have considered bills that would implement state-run IRA-type retirement plans
designed to make retirement savings options available to workers at small and medium sized companies.
NAIFA POSITION: NAIFA understands the importance of retirement security and acknowledges that many Americans are not
saving enough for retirement. However, NAIFA does not believe that a state-run plan that competes with private market plans is
the answer. Availability and access to retirement savings options are not the problem— there already exists a strong, vibrant
private sector retirement plan market that offers diverse, affordable options to individuals and employers. Nearly 80% of full-time
workers have access to a retirement plan through their employer, and more than 80% of workers with workplace access to plans
participate in a plan. NAIFA believes that states would be better served by using scarce state resources for education and
outreach efforts designed to educate their citizens about the importance of saving for retirement, rather than implementing their
own costly state-run plan. NAIFA supports the voluntary, private market-oriented legislation enacted in Washington State and
New Jersey, as discussed below.
CURRENT STATUS: In 2015, 17 states considered legislation that would establish a state-run retirement plan. To date,
California, Illinois, Oregon and Massachusetts are the only states that have enacted legislation establishing a program. The
California, Illinois, and Oregon programs will automatically enroll most state residents in a state-sponsored retirement account if
their employer does not already offer a retirement plan option; the Massachusetts plan is narrowly limited to non-profit
organizations with less than 20 employees. Due to numerous legal and cost concerns, none of these plans have been
implemented or become operational. No other state has enacted legislation establishing a state run retirement plan. Washington
State and New Jersey have enacted legislation which sets up a voluntary retirement marketplace designed to bring together
employers and private market plan providers.
Seven states have appointed commissions to study the feasibility of state run retirement plans—Connecticut; Vermont;
Minnesota; Maryland; Virginia; Utah and West Virginia. These commissions are under various time deadlines to report their
findings to their state legislatures. The following states have considered but not enacted legislation addressing the issue of a
state-run retirement plan: Colorado; Delaware; Indiana; Kentucky; Maine; Massachusetts; Montana; New York; Rhode Island;
Wisconsin. Finally, the U.S. Department of Labor has proposed a rule that would facilitate the enactment of state run retirement
plan legislation by exempting such plans from coverage under ERISA.
ABOUT NAIFA: Founded in 1890, NAIFA is one of the oldest and largest financial services organizations representing the interests of insurance
professionals from every Congressional district in the United States. Members assist consumers by focusing their practices on one or more of the
following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is
to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its
members.
A partnership between NAIFA, the National African American Insurance Association, and Women in Insurance & Financial Services promotes
collaborative industry advocacy activities to strengthen and unify the insurance and financial advisors’ voice in the legislative and regulatory
environment.
FOR MORE INFORMATION, CONTACT:
Gary Sanders
Matthew Laptew
Counsel & Vice President
Program Manager
Government Relations
Government Relations
(703) 770-8192
(703) 770-8157
[email protected]
[email protected]
Copyright © 2016 National Association of Insurance and Financial Advisors (NAIFA), All Rights Reserved.
2901 Telestar Court • Falls Church, VA 22042-1205 • 703/770-8100 • www.NAIFA.org
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