Delaware EARNS savings plan on way to governor
- The Delaware EARNS act is on its way to the governor’s desk.
The legislation passed 20 to 0 in the Senate and 35 to five in the House.
- EARNS, short for Expanding Access for Retirement and Necessary Savings, would become effective in 2205.
Three-year cost of the program is about $1 million. Delaware would join more than a dozen states that offer similar programs.
The program would be offered to employees who are not covered by an employer 401(k) retirement savings plan.
- The bill would be effective upon notice by the State Treasurer to the Registrar that sufficient funding has been appropriated to implement the program. The act is expected to be implemented in 2025. It will operate under the State Treasurer’s office with oversight from a seven-member board.
- The program operates with a provision that automatically enrolls an employee unless he or she opts out. The approach typically increases participation in savings plans. An amendment would allow the board administering the program to assist small employers in need of software to implement the program.
Savings plans are also exempt from federal and state taxes until the money is tapped.
- Backers of the bill say the measure, long term, will reduce the number of older residents who end up on public assistance, due to a lack of retirement savings. They also see the program as a way to attract employees sought by small businesses.
AARP Delaware, which strongly supported the bill, noted that 66% of Delaware workers employed by businesses with fewer than 100 employees do not have a pension or retirement plan, with 46% of all employees having no access to retirement plans.
“The pandemic has shown how vital it is for Americans to have savings to depend on,” said AARP Delaware State Director Lucretia Young.” DE EARNS would allow Delaware private-sector workers to easily save for the future to take care of themselves, and afford life’s necessities like food and medicine as they age.”
The bill had bipartisan support but was opposed by the Delaware Restaurant Association, which argued against automatic enrollment.