DOVER — The Delaware General Assembly has nearly unanimously approved a new state-sponsored retirement savings program aimed at helping people who don’t have access to an employer-sponsored program.
House Bill 205also known as Delaware Expanding Access for Retirement and Necessary Saving program, or DE EARNScreates a state-sponsored, employee-funded, employer-facilitated, state-supervised savings plan.
It requires companies with more than five employees that do not currently offer a pension plan to participate in the payroll process. They are not required to provide any matching contribution to participating employees. Members would benefit from pooling and investing their retirement funds in securities.
The state Senate voted unanimously, with state Sen. Trey Paradee (D-Dover) not voting, to approve the measure that passed the House of Representatives in May. Only five House Republicans voted against the bill Sponsored by Democratic Representative Larry Lambert and State Senator Nicole Poore who are now heading for Governor John Carney.
Prefaced by the fact that many Americans and Delaware residents are not saving enough for their future, DE EARNS aims to ease the barriers faced by small employers by providing options, closing the wealth between low to low earners and to keep Delaware competitive. with neighboring states by attracting talented workers to Delaware.
Under HB 205, a DE EARNS Program Board will be created to oversee the initial design and implementation of the program. It will be dissolved before December 31, 2025, with all duties and functions transferred by the Plan Management Board, which oversees other investment programs under the Office of the State Treasurer. The plan is expected to launch on January 1, 2025.
“More than half of the state’s workforce doesn’t have an easy way to save through a workplace retirement program,” state treasurer Colleen Davis said in a statement. press release celebrating the passage of the bill. “Not only will Delaware EARNS help these employees save for the future, but it will also benefit small businesses who may not be able to offer employee retirement plans due to cost and administrative burden, allowing them to attract and retain good employees by offering a crucial benefit such as retirement savings.
The bill was supported by the Delaware State Office of AARPwho surveyed state residents aged 45 and older and found that they are 15 times more likely to save if they can do so through their job using payroll deductions. However, in part due to a lack of employer-sponsored plans, the average working-age household has only $2,500 saved for retirement, and households nearing retirement have only $14,500. $. This leads many to rely on Social Security when they retire.
By reducing the public’s reliance on state assistance in retirement, AARP estimated DE EARNS could end up saving taxpayers $18.2 million in the long run. The program is expected to cost less than $1 million to set up and operate over the next three fiscal years, according to a tax memo attached to HB 205.
“The pandemic has shown how vital it is for Americans to have savings to rely on,” AARP Delaware State Director Lucretia Young said in a statement during the adoption. of the Senate. DE EARNS would make it easy for private sector workers in Delaware to save for the future to take care of themselves and afford life’s necessities like food and medicine as they age.