New law will establish statewide retirement savings plan

 

STATE HOUSE — A newly signed law sponsored by Sen. Meghan Kallman and Rep. Evan P. Shanley will establish a convenient, low-cost public-option retirement savings program for Rhode Islanders.

“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,” said Senator Kallman (D-Dist. 15, Pawtucket, Providence). “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. I also want to thank Treasurer Diossa and his team along with the huge collation of community advocates who all did an enormous amount of work to develop this legislation and move it across the finish line.”

Said Representative Shanley (D-Dist. 24, Warwick, East Greenwich), “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. 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.”

The Rhode Island Secure Choice Retirement Savings Program (2024-S 2045aa, 2024-H 7127aa), administered by the office of the General Treasurer, will see retirement savings accumulated in individual accounts for the exclusive benefit of the participants or their beneficiaries. Private employers who do not already offer a retirement savings plan would be required to offer workers access to the Secure Choice program.

Under the new law, the General Treasurer is charged with administering contributions through payroll deductions and investing these funds in accordance with best practice 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 Secure Choice Act is a great investment in Rhode Island families,” said Rhode Island General Treasurer James A. Diossa. “For too long, more than 40% of private sector employees in the state have lacked the assurance of adequate retirement savings. Secure Choice will help transform the retirement landscape by offering the opportunity to prepare for retirement. I am thankful to Senator Kallman and Representative Shanley for their leadership, and to the entire General Assembly.”

The program will be free for employers to sign up for 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.

“Hardworking Rhode Islanders deserve to retire with dignity and that is why we are thrilled to celebrate the passage of Secure Choice,” said Catherine Taylor, AARP Rhode Island state director. “On behalf of our members and the 172,000 Rhode Island workers who do not currently have access to retirement savings options on the job – AARP Rhode Island commends House and Senate leadership for uniting on this vital legislation that will make it easier for workers to build towards a secure retirement and plan for their futures.”

At least 19 other states, including neighboring Connecticut, have already established secure choice programs and others are currently establishing them. Among the biggest beneficiaries are small businesses and their employees. Approximately 70% of workers at companies with fewer than ten employees have no access to retirement savings through work.

Said Kristina Contreras Fox, director of policy and advocacy at the Rhode Island Black Business Association, “The Rhode Island Black Business Association is thrilled to see our General Assembly take bold action in supporting robust small business growth and closing the racial wealth gap by passing the Secure Choice Retirement Savings Act. 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. 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 RI 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. Thank you to Chairman Shanley and Senator Kallman for their advocacy and leadership getting Secure Choice passed and thank you to Speaker Shekarchi and Senate President Ruggiero for their strong support of the legislation from day one.”

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