Legislators to consider statewide retirement savings program

LANSING — A new legislative proposal calls for a statewide retirement savings program to help Michiganders save for the future, including those who work for small businesses that might not normally have such benefits.

The program is titled MI Secure Retirement and comprises House Bills 5335 and 5336, introduced by state Reps. Mike McFall, D-Hazel Park, and Mark Tisdel, R-Rochester Hills.

If approved by the state House and Senate and signed by the governor next year, the program will allow employees of any business to contribute to an individual retirement account directly through payroll deduction, regardless of whether their employer sponsors a retirement plan.

“The heart of the issue is making sure people are ready for retirement,” McFall said.

The program would operate as a public-private partnership overseen by a state board and the state treasury, growing the funds through an investment firm. McFall compared it to the 529 Michigan Education Savings Program.

All workers would be offered the plan when they’re hired. If they decline, they can always opt in later. They can also access the funds at any time, so the funds are available in an emergency. And if they change jobs, they can still easily access the funds since they’re managed by the state.

McFall originally pitched the concept last year, and bipartisan support this year has given it renewed momentum. He said the plan addresses multiple needs. First and foremost is what McFall describes as an urgent need to address Michigan’s growing retirement security gap.

He points to a report by the American Association of Retired Persons, which shows that as of 2020, nearly 42% of Michigan’s private-sector workers ages 18-64 lacked access to a retirement savings plan at their place of employment.

Another report by the Pew Charitable Trusts’ retirement savings project estimates there are currently 1.5 million Michigan workers without workplace retirement benefits.

McFall said the program also supports small businesses that form the economic backbone of many communities. Due to their more limited resources, small businesses can’t always afford to offer a retirement plan. With this program, they could offer that benefit at no additional cost.

“It makes small businesses much more competitive when they’re trying to recruit talent,” McFall said.

He believes there’s also a benefit to taxpayers, since more people being able to safely retire would reduce the burden on public safety net programs such as the Supplemental Nutrition Assistance Program. Research by Pew estimates as much as $11 billion in taxpayer savings over the next 20 years if a statewide retirement savings program is implemented.

“You go to food pickups at Forgotten Harvest and Gleaners and there are so many seniors picking up boxes. With this program, maybe they wouldn’t have to do that. I think if more people were given the proper tools to start saving, many people would take advantage of it,” McFall said.

“In the end, it will also save taxpayer dollars by keeping more people off public assistance,” he said. “Hopefully it will also allow people to age in place instead of having to be forced out of a home they’ve been in for decades because they can no longer afford to stay there.”

Currently, there are 17 states in the country that have implemented similar laws, with 14 of them having active programs, often referred to as “secure choice” or “work and save.”

Tisdel, the bills’ cosponsor, said such a program would make a real difference in Michigan.

“Every hardworking Michigander deserves the opportunity to save for a secure future. That shouldn’t depend on the size of your employer or where you work,” Tisdel said in a statement.

“Providing a simple, reliable savings option supports personal responsibility, empowers workers, and builds long-term financial independence,” he said. “This is a practical step that strengthens Michigan families.”