This is an archived article that was published on sltrib.com in 2017, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Utah's legislative session is upon us, which means our elected representatives will debate hundreds of bills that have will have impact on the lives of Utahns. One such proposal is a bill by Sen. Todd Weiler, R-Woods Cross, Small Employer Retirement Plan, that will help employees save for retirement through their workplace.
Why is this so significant? If you're like most Utahns, you hope to retire one day. AARP surveyed 1,000 Utahns age 25-64, and 89 percent hope to retire from working completely. So what's the catch? One in six of Utahns has less than $5,000 in savings. Given that the average lifespan is now nearly 80, it's sobering to wonder how these people will have financial security in their retirement years.
This fear is not lost on workers with meager savings. More than four out of five wish they were able to save more for retirement. Obstacles include not having money left over after paying bills, debt, health issues and pay cuts. Many also do not have access to a retirement savings plan at work, but 84 percent said they would take advantage of one if it was offered by their employer.
How would Weiler's plan work? It's not a 401(k) plan or pension. Workplace savings plans would operate like the Utah Educational Savings Plan, also known as a 529 plan. Employers would provide automatic payroll deduction for workers who choose to put a portion of their paycheck into an IRA savings plan. It would be authorized by the state and run by the private sector. The plan would be professionally managed, and people would voluntarily participate, with no ongoing costs to taxpayers. It would also be portable. Essentially, these plans help workers save by making sure part of each paycheck goes into savings before the check is cashed in a seamless process that requires little action from the employer or the employee.
If this plan sounds familiar, it's because it was proposed during last year's legislative session and easily passed the Senate, though it was shelved in the House of Representatives. The mechanics of the plan were carefully considered and debated by a working group established in 2015 by Senate Joint Resolution 9, which directed Utah's workers and business community to study and develop a model for saving for retirement through the workplace. A working group of small business, labor, community, government and legislative representatives met several times and analyzed a wide variety of work-and-save proposals before agreeing on the plan that became the basis of last year's legislation. Then-State Treasurer Richard Ellis chaired the working group, followed by current State Treasurer David Damschen, who has recognized the need to have more Utahns save for retirement.
Legislators need not worry about public support in Utah; according to AARP's survey, support for this type of plan was overwhelming; 77 percent of those engaged support a Utah Retirement Savings Plan, and 83 percent think Utah should work with the private sector to develop and run its own state retirement savings plan. Almost 90 percent of conservative voters agreed that Utah should run its own plan.
There is good reason to believe that Utah would benefit greatly from developing a workplace savings plan. Recently AARP Utah commissioned Notalys LLC to conduct a study of retiree preparedness over the next 15 years, a time in which nearly half a million Utahns will reach retirement age. Researchers found that one in five retirees will retire with more debt than savings, and that the total cost to taxpayers for new retirees needing to receive public assistance will be $3.7 billion.
But the news was not all bad. They found that if the one-third least prepared retirees saved an additional $14,000 over their entire career, the government could save $194 million in program outlays.
Workplace savings plans encourage individual responsibility and independence. No one wants to rely on government programs for his or her next meal or place to live. Retirement planning can be difficult, expensive and overwhelming. Finding low-cost, convenient ways to save is a goal that workers, employers and the government all share. Let's see it happen here in Utah.
Alan Ormsby is the state director for AARP Utah, which has 221,000 members.