Beth Pearce

State Treasurer Beth Pearce spearheads a new state-sponsored retirement program.

Pending the results of a technical review to make sure the new state-sponsored retirement program meets all federal requirements, Vermont businesses with 50 or fewer employees and self-employed workers who do not have retirement plans can sign up for the Green Mountain Secure Retirement Plan thanks to a law passed in 2017.

“Once the review is done, we’ll be up and running,” said State Treasurer Beth Pearce, who is spearheading the program. “In the meantime, we’re meeting with businesses to explain how the program will work. This program will broaden the opportunity for more Vermonters to be better prepared for retirement and will strengthen the economic vitality of our state.”

The law was prompted by a 2015 report from AARP that says 45 percent of private wage and salaried workers in Vermont — 104,000 workers — are not covered by employer-sponsored retirement plans, and also by a 2017 report from the Center for Retirement Initiatives at Georgetown University’s McCourt School of Public Policy that says small businesses, which represent 94 percent of all employers and employ 43 percent of Vermont’s private-sector labor force, are among the least likely to provide retirement savings plans.

The Georgetown report was commissioned by the state’s Public Retirement Study Committee, which was established by the Legislature in response to concerns that there has been a significant increase in the number of Vermonters at retirement age who have inadequate or no retirement plans.

“The Green Mountain Secure Retirement Plan is a culmination of three years of study with the Public Retirement Study Committee. I look forward to working with businesses, advocacy groups and other stakeholders to implement the program,” Pearce said.

“The retirement security challenge in Vermont is real,” the Georgetown report concludes. Vermont’s population is aging and will become a much larger portion of the state’s population between now and 2032, which could be a problem, according to the report, because too many Vermonters have income levels in retirement that are “below what is considered necessary to meet basic needs.”

“Elderly poverty is something we are very concerned about. We want to make sure that every single individual in this state has an opportunity for a lifetime of financial well-being,” said Pearce. Private-sector workers at the lowest income level, the bottom 20 percent, are more than three times as likely to be uncovered by a workplace retirement plan than those at the top 20 percent.

According to the Georgetown report, titled “Review of Potential Public Retirement Plan Options for Private Sector Employees/Employers in the State of Vermont”: “There are significant budgetary and economic consequences of a growing number of retirees with limited financial resources. Left unaddressed, Vermont will face the possibility of more of its seniors living at or below the poverty line and increasingly pressed to deal with the dramatic increases in the cost of social service programs, including health care, housing, and food and energy assistance. As income falls, there is less consumer spending and the available tax base is reduced. By way of contrast, if retirees have greater levels of savings and income to spend, they can contribute to the strength of local and national economies.”

The Georgetown report says increasing the net worth among the bottom one-third of retirees in Vermont by just 10 percent would decrease government outlays by more than $194 million over the next 15 years. The Green Mountain Secure Retirement Plan is one step toward that goal.

“When people have enough money in retirement they buy goods and services. We see this as an economic generator,” Pearce said.

The 2017 legislation gave the state the power to set up the retirement plan, open to businesses with 50 or fewer employees that do not currently offer a plan to their employees, and to self-employed individuals. The state’s plan cannot compete with existing private sector plans and must be funded through pre-tax dollars from the workers covered by the plan. All employees of participating businesses will automatically be enrolled, but will have the option of withdrawing from the plan. Initially, the program will be funded by employee contributions with an option for future voluntary employer contributions.

The program will be run by TAG Resources, a retirement services company based in Knoxville, Tennessee, and will be overseen by a seven-member board of directors which will set program terms, design plan documents and appoint an administrator to assist in the selection of investments. Pearce is the board’s chairwoman.

According to Pearce, the pension plan will utilize a series of mutual funds considered “best in class” funds. Pearce has not set a target for enrollment, since the program is so new and is the “first of its kind” in the U.S. “Our focus is in trying to assist people in having financial well-being in retirement and dignity in retirement,” she said.

The state treasurer’s office currently administers retirement programs for 54,000 people through the Vermont Municipal Employees’ Retirement System, Vermont State Employees’ Retirement System, and Vermont State Teachers’ Retirement System.

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