Michigan workers could gain retirement lifeline with auto-IRA proposal

investmentnews.com:

Millions of workers across Michigan who’ve historically been shut out of the employer-sponsored retirement plan market could get a new option to prepare for their retirement courtesy of a newly introduced bill.

House Bill 5461, introduced by Democratic state Rep. Mike McFall, seeks to establish a state-facilitated retirement savings program. Workers whose employers don’t offer retirement benefits would automatically be enrolled into the program, giving them a valuable safety net to build savings for life after work.

The proposed “MI Secure Retirement” plan would give workers the flexibility to adjust their contribution levels and they could opt out at any time, with provisions allowing them access to their funds during financial emergencies without penalties.

Fifteen states across the country have already adopted such programs, which are also known as auto-IRAs, work and save programs, or secure choice programs. Michigan’s new legislation would address a pressing need for the nearly 42 percent of workers between 18 and 64 years of age in the state’s private sector who don’t have access to a workplace retirement savings plan, based on 2020 estimates.

“This program will help small businesses retain employees, allow for more Michiganders to have additional financial autonomy in retirement, and save tax dollars because fewer people will need to take advantage of social safety net programs as they age,” McFall said in a statement unveiling the bill.

“Millions of workers across the country — and 1.5 million in Michigan — are struggling to save enough for retirement simply because they lack access to workplace savings,” said John Scott, director of The Pew Charitable Trusts’ retirement savings project.

Research from Pew