Maine and Colorado have established a groundbreaking partnership to streamline and enhance retirement savings for workers in Maine. This innovative collaboration, the first of its kind in the nation, is expected to inspire other small states to follow suit.
Through the Maine Retirement Investment Trust (MERIT), in conjunction with the Colorado SecureSavings Program, a state-managed retirement savings initiative has been introduced in Maine. This significant step will enable approximately 200,000 Maine workers, who currently lack retirement saving plans through their employers, to take control of their own retirement savings. It is worth noting that approximately 40% of private-sector workers in Maine do not have access to an employer-sponsored retirement plan.
Unlike traditional retirement savings plans tied to specific employers, this program is employee-centric, allowing workers to maintain their accounts as they transition between jobs. By facilitating the movement of accounts across different employers, this approach empowers workers to ensure their retirement savings continue to grow and remain accessible.
"The partnership with Colorado will provide invaluable support to small states like Maine, enabling them to offer comprehensive retirement savings services without shouldering all the challenges alone," stated Angela Antonelli, Executive Director for the Center for Retirement Initiatives at Georgetown University. "This collaboration will enhance Maine's ability to offer efficient and cost-effective retirement savings options."
By accelerating the pilot program launch, scheduled for this fall, the partnership will also expedite the full implementation of the program by 2024. This accelerated timeline serves as a testament to the effectiveness and efficiency of the collaboration, creating a replicable model for other states to emulate.
Antonelli further asserts that this pioneering partnership will inspire other states to develop programs aimed at addressing the retirement saving deficits affecting 57 million workers nationwide. With an increasing understanding among state leaders of the potential burden placed on government resources and taxpayers should retirees face poverty, offering accessible retirement savings options becomes imperative.
Furthermore, Antonelli highlights the success experienced by the 19 states that have already implemented retirement programs. Notably, approximately 70% of those automatically enrolled in these programs actively choose to save for retirement. While the remaining 30% may opt out temporarily due to financial constraints or other personal circumstances, the high adoption rate showcases the positive impact these programs have on workers.
The collaboration between Maine and Colorado represents a significant milestone in the pursuit of comprehensive retirement savings solutions. By providing workers with accessible and flexible retirement plans, these innovative partnerships pave the way for a brighter future and provide hope for a secure retirement.
State-Run Retirement Programs Expand to Include Colorado and Maine
These 19 state-run programs had over $1 billion in assets administered as of July 31, according to Antonelli.
With the success of the state-run retirement savings programs in states such as California, Illinois, and Oregon, the Colorado and Maine partnership represents the next step in having low-cost, portable retirement savings options available to workers.
A Tailored Retirement Savings Program
"Workers in every state want a free and easy way to save so they can retire with dignity. Partnering with Colorado, we will share costs, create scale, and tailor a retirement savings program to meet the needs of Mainers," said Henry Beck, Maine state treasurer.
Beck believes that the first-of-its-kind partnership will benefit all residents of Maine by making it easy for everyone to automatically save for their retirement at work.
Enlarging the Customer Base
According to JP Aubry, associate director of state and local research at the Center for Retirement Research at Boston College, it has been difficult to entice the private sector to serve small states with limited populations and workers with small savings balances. However, having a partnership like Maine and Colorado makes the potential pool of customers larger and reduces costs.
Aubry believes that other small states may find it advantageous to follow suit.
Ensuring a Cost-Effective Choice
"We are looking forward to working closely with Maine in providing a high-quality, accessible retirement option to savers in our states. As more states adopt programs, it is imperative that smaller states are confident in their ability to provide a cost-effective choice," said Hunter Railey, director of the Colorado SecureSavings Program.
Administrative Services Provided by Vestwell
Vestwell, in partnership with BNY Mellon, will provide administrative services for the program in Colorado and Maine. Vestwell already serves as the vendor for Colorado's SecureSavings program and administers state-run plans in states such as Oregon, Maryland, and Connecticut.
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