President Trump may have unwound the ERISA safe harbor for state-run retirement plans for private sector workers, but that didn’t keep another state from approving its program.
In its final hours last Thursday, the Vermont legislature voted to approve S135, Vermont’s economic development omnibus bill, including a provision that establishes the “Green Mountain Secure Retirement” plan for small businesses. Vermont Governor Phil Scott is expected to sign the measure.
‘Green’ Grasp
One of the goals of the plan is that it does not compete with established private options. The Treasurer’s office also must make sure it complies with established state and federal laws. The bill says that the State of Vermont shall implement the “Green Mountain Secure Retirement Plan” on or before Jan. 15, 2019, based on the recommendations of the Public Retirement Plan Study Committee.
The bill impacts self-employed individuals and employers with 50 employees or fewer that do not currently offer a retirement plan to their employees. It allows (rather than requires, as the other state-run automatic IRA programs launched to date have) employers to automatically enroll all employees of employers that choose to participate in the multiple employer plan (MEP), while allowing employees the option of withdrawing their enrollment and ending their participation in the MEP. Initially the program only calls for employee contributions, but provides an option for future voluntary employer contributions.
The Vermont program would be overseen by a board that will:
- set program terms;
- prepare and design plan documents; and
- be authorized to appoint an administrator to assist in the selection of investments, managers, custodians, and other support services.
Board Build
The board is to be comprised of seven members:
- an individual with investment experience, to be appointed by the Governor;
- an individual with private sector retirement plan experience, to be appointed by the Governor;
- an individual with investment experience, to be appointed by the State Treasurer;
- an individual who is an employee or retiree, to be appointed by the State Treasurer;
- an individual who is an employee advocate or consumer advocate, to be appointed by the Speaker of the House;
- an individual who is an employer with 50 employees or fewer and who does not offer a retirement plan to his or her employees, to be appointed by the Committee on Committees; and
- the State Treasurer, who shall serve as chair.
Future Reports
The bill also says that that committee shall “…on or before January 15, 2020 and every year thereafter, report to the House and Senate Committees on Government Operations concerning the Green Mountain Secure Retirement Plan, including: (i) the number of employers and self-employed individuals participating in the plan; (ii) the total number of individuals participating in the plan; (iii) the number of employers and self-employed individuals who are eligible to participate in the plan but who do not participate; (iv) the number of employers and self-employed individuals, and the number of employees of participating employers. who have ended their participation during the preceding 12 months; (v) the total amount of funds contributed to the Plan during the preceding 12 months; (vi) the total amount of funds withdrawn from the Plan during the preceding 12 months; (vii) the total funds or assets under management by the Plan; (viii) the average return during the preceding 12 months; (ix) the costs of administering the Plan; (x) the Board’s assessment concerning whether the Plan is sustainable and viable; (xi) once the marketplace is established: (I) the number of individuals participating; (II) the number and nature of plans offered; and (III) the Board’s process and criteria for vetting plans; and (xii) any other information the Board considers relevant, or that the Committee requests.”
Despite the removal of the Obama administration’s ERISA safe harbor for such programs, most of those already underway have said they intended to go forward, including Oregon, California and Connecticut.
