Pew Supports Bill Designed to Help 1.5 Million Michigan Workers Access a Secure Retirement

WASHINGTON—The Pew Charitable Trusts expressed support today for a retirement savings bill in the Michigan Legislature, noting that the measure would help some 1.5 million private-sector workers secure a stronger financial future.

The Michigan Secure Retirement Savings Program (HB 5335 and HB 5336) would establish an automated savings program for workers who lack access to an employer-sponsored savings plan, giving them an individual retirement account (IRA), which sets aside a portion of their wages every pay period.

Under the legislation, workers could save at a standard rate or choose a savings level to meet their needs. Workers would have full control of their contributions and investments and could opt out at any time. Meanwhile, businesses registered in the program would seamlessly enroll their employees at no cost. The program would be a public-private partnership professionally managed by a private financial services firm with oversight by the state.

Seventeen states have passed similar laws, which are variously known as “auto-IRA,” “work and save,” and “secure choice.” These laws exist in California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington. While some of the state programs remain in development, more than a million savers in the 14 states with active programs have already amassed over $2.5 billion in assets since 2017. Ten additional states have introduced legislation to create such a program this year.

John Scott, director of The Pew Charitable Trusts’ retirement savings project, issued the following statement:

“The retirement savings program would be a win for Michigan taxpayers, employers, and employees. The 1.5 million workers in Michigan currently lacking access to retirement benefits through their employer could finally save for a more secure future. Small businesses unable to attract and retain workers who want a retirement plan could have a way to do so. And by making workers less reliant on the state’s safety net, Michigan taxpayers could save as much as $11 billion over the next two decades.

“Research shows that workers are 15 times more likely to save for retirement if they can use payroll deductions. And this would open a new opportunity for the 42% of the state’s private-sector workforce who currently lack access to retirement savings at work.

“As we’ve seen in the 17 other states that have enacted auto-IRA legislation, the Michigan Secure Retirement Savings Program will also strengthen small businesses by enabling them to compete more effectively with larger competitors to attract, recruit, and retain top talent.

 “We urge the Legislature to pass the Michigan Secure Retirement Savings Program, which would give workers a new path to retirement security and help Michigan workers, businesses, and taxpayers.”