PROVIDENCE – A newly signed law will establish a low-cost, public-option retirement savings program for Rhode Islanders.
The Rhode Island Secure Choice Retirement Savings Program will be administered by the R.I. Office of the General Treasurer, and private employers that do not already offer a retirement savings plan will be required to offer workers access to the Secure Choice program.
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Under the new law, the general treasurer is charged with administering contributions through payroll deductions and investing these funds in accordance with best practices for retirement savings vehicles.
The act will become effective for all eligible employers within 36 months of the opening of the program enrollment following a phased implementation period.
The program will be free for employers to sign up and employees will be automatically enrolled with the ability to opt out anytime. The savings will belong to the employee – they will be able to choose how much to contribute via automatic payroll deduction and take it with them from job to job.
The legislation establishing the program was signed into law by Gov. Daniel J. McKee on June 26.
“Most of us will reach an age when we will want to stop working however for thousands of workers in Rhode Islander this is not an option because they do not have money set aside for retirement,” Sen. Meghan Kallman, D-Pawtucket, one of the primary sponsors of the bill, said in a statement. “Secure Choice is a convenient, portable, voluntary IRA managed by the state that works directly through workers’ jobs; essentially a public-option IRA for those whose employers do not offer one.”
At least 19 other states, including neighboring Connecticut, have already established Secure Choice programs. Advocates for the program say the biggest beneficiaries are small businesses and their employees. Approximately 70% of workers at companies with fewer than 10 employees have no access to retirement savings through work.
“While most Rhode Islanders save for retirement through pensions or a 401(k), there are many who don’t have access to these retirement plans, and we’re seeing a retirement savings crisis across the country,” said Rep. Evan P. Shanley, D-Warwick, a bill sponsor. “This program would allow workers to contribute a portion of their salary to individual savings accounts through payroll deductions, at no cost to their employers. When I talk to small businesses in my community, they really care about their staff and want their workers to be able to save for retirement. But small-business owners can’t be experts in everything and often don’t know where to start with offering retirement savings. This law gives them a way to support their workers and gives workers a chance to save.”
General Treasurer James A. Diossa said more than 40% of private-sector employees in the state have lacked an adequate retirement savings plan.
“Secure Choice will help transform the retirement landscape by offering the opportunity to prepare for retirement,” he said.
Kristina Contreras Fox, director of policy and advocacy at the Rhode Island Black Business Association, said the creation of the Secure Choice program will help small businesses grow and close the racial wealth gap.
“Small-business owners have advocated for years in support of this legislation since it will help them recruit talented workers looking for good jobs not only with a living wage but also strong benefits,” she said. “For minority entrepreneurs, the passage of this bill also brings an added measure of support for their families. Over half of all Black and brown households in Rhode Island are in danger of having no retirement savings at all. In passing Secure Choice, a crisis will now transform into opportunity and prosperity across the state.”
