Deadline Looms for Maryland Auto-IRA Task Force
With time running out on its deadline for providing recommendations, a task force examining alternatives for a possible state-run IRA program in the Old Line State continued to debate the issues.
At the Dec. 1, 2014 meeting of the Governor’s Task Force to Ensure Retirement Security for All Marylanders
, the group continued studying retirement plan access problems and solutions, presumably with an eye toward recommending a state-run automatic enrollment IRA program.
The meeting took place just a day before the Illinois House of Representatives passed legislation that would require employers with at least 25 employees, and who do not provide access to an employer-sponsored retirement plan to automatically enroll workers in the state-run auto IRA arrangement (or be subject to a fine). The Illinois Senate approved the House version of the bill by a 30-25 margin. Exactly 30 votes were needed, and two senators did not vote. Illinois Gov. Pat Quinn (D) — who lost his reelection bid in November — is expected to sign the bill into law.
Testimony provided at the Maryland task force hearing came first from Kim Lamphier of Maryland Business, a local organization comprised of small businesses supporting auto-IRA. She cited a statistic stating that about 70% of employees making between $30,000 and $50,000 per year save for retirement when their employers offer a plan, while only 5% save on their own when no such plan is offered.
In touting the auto-IRA option, Lamphier noted that small businesses want retirement plan options that:
- are easy to establish;
- are affordable;
- relieve small businesses of fiduciary responsibility;
- are portable;
- maximize participation; and
- are comparable to plans offered by larger companies regarding scale.
Following Lamphier’s testimony were remarks by opponents of auto-IRA, including the National Federation of Independent Business (NFIB), the Maryland chapter of the National Association of Insurance and Financial Advisors (NAIFA), the Maryland Chamber of Commerce, and the Securities Industry and Financial Markets Association (SIFMA). Those groups expressed concerns with imposing mandates on employers, advocated encouraging SIMPLE IRAs as an alternative approach, and asserted that the access gap could be bridged through financial literacy programs.
In response, members of the task force repeatedly noted that 50% of Maryland workers do not have retirement plans at work. Chair and former Lt. Gov. Kathleen Kennedy Townsend (D) said that improving awareness about existing plans may serve to increase participation, but that does not address access for those without a plan.
The task force meeting ran well beyond the allotted time, so the group is planning to wrap its 2014 conversations via teleconference in the next two weeks and circulate “guiding principles” for what could be its final report to the Governor’s office. There is no word yet if Governor-elect Larry Hogan, a Republican, will wish to continue the task force’s work beyond its Feb. 15, 2015 end date set by the executive order of outgoing Gov. Martin O’Malley, a Democrat, though O’Malley could extend that deadline before he leaves office.
It is also not yet clear what, if any, impact the legislative success in Illinois could have on a bill in Maryland or other states where similar proposals are on the table.
Ray Harmon, Esq. is government affairs counsel for ASPPA/NAPA/NTSA.