Maine and Colorado enter first-in-nation partnership for automatic retirement savings

Courtesy / Office of Sen. Eloise Vitelli In July, Gov. Janet Mills held a ceremonial bill signing for LD 1082, An Act to advance the Maine Retirement Savings Program, sponsored by Sen. Eloise Vitelli, D-Arrowsic. Vitelli, MERIT Executive Director Beth Bordowitz, State Treasurer Henry Beck and advocates from AARP look on

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By Laurie Schreiber

The first automatic workplace retirement savings partnership in the U.S. is expected to soon provide Maine employers with an easy and free automatic retirement savings program for their employees.

The Maine Retirement Investment Trust, or MERIT, recently established a partnership with the Colorado SecureSavings Program in order to begin a state-run retirement savings program in Maine.

“Our first-of-its-kind partnership benefits all of us and makes it easy for everyone to automatically save for their retirement at work,” said Maine State Treasurer Henry Beck.

The MERIT program is anticipated to provide 200,000 Mainers a chance to save for retirement.

“We are excited to be working with Colorado SecureSavings to deliver a proven automatic savings program that follows employees throughout their careers while being easy and free for participating Maine employers,” said MERIT Executive Director Elizabeth Bordowitz.

The partnership agreement was signed Aug. 11. The partnership helps the state of Maine offer a cost-friendly, state-run retirement program for workers who don’t have access to a retirement savings program. The goal is to increase the number of Mainers saving for retirement. The partnership also helps to decrease fees for Coloradan savers.

Vestwell, a digital 401(k) recordkeeping platform in New York City, in partnership with the Bank of New York Mellon Corp., serves as the program administrator, providing recordkeeping, custodial and administrative services to employers and employees in Maine and Colorado.

The state-run retirement savings partnership extends low-cost, portable retirement savings options to workers without access to a savings program.

Maine employers with five or more workers must offer a qualified retirement savings plan for their employees beginning in January. The Maine Legislature created MERIT to provide employers with a free, easy way to meet the new workplace savings requirement.

Colorado business owners need to decide on their retirement plan options by Dec. 31. The Colorado SecureSavings program has nearly 12,000 registered employers this far.

The program comes at a time when 40% of Maine private sector employees lack access to a work-based retirement savings program.

In June, the Maine Legislature and Gov. Janet Mills signed a law that sets the expectation that employers with five or more workers not offering a qualified retirement savings plan must begin using an easy and free portal to enroll employees in Maine’s new retirement savings program starting in 2024.

The MERIT program is overseen by a public board whose members are appointed by the governor and confirmed by the legislature. Bordowitz, former CEO of the Finance Authority of Maine, was appointed executive director last October and was tasked with conducting a national review of established state retirement savings programs to identify best practices and potential private and pubic partners.

“States like Oregon, Illinois and California have paved the way over the past five years as they developed efficient systems and built enrollment in their retirement saving programs,” said Bordowitz.

Maine’s new retirement savings program will launch broadly in early 2024.

A pilot program is scheduled to be available this fall.

There is no cost for employers and no requirement for an employer match. Employers offering their employees a qualified retirement savings program are not required to participate in MERIT. Program leaders are engaging employers and other stakeholders in discussions about policies related to seasonal employees, part-time employees, temporary employees, and automatic re-enrollment.

MERIT will provide all Maine workers without a qualified employer retirement savings plan with access to an automatic, low-cost retirement savings and investment program. MERIT will also follow workers from job to job and throughout their careers. All covered employees will be enrolled and have 5% of their paycheck automatically contributed to a Roth IRA account.

MERIT will also allow voluntary enrollment for workers not employed by covered employers and self-employed individuals.

According to Georgetown University’s Center for Retirement Initiatives, 207,000 of Maine’s 504,000 private sector employees (41%) lack access to a retirement savings plan at work.

The Maine Retirement Savings Program was created in 2021 by LD 1622, An Act To Promote Individual Retirement Savings through a Public-Private Partnership.