Welcome to Maine sign. Credit: pabrady63/Adobe Stock
A number of states are attempting to boost retirement saving by adopting “auto-IRA” policies that require employers not currently offering an employer-sponsored retirement plan to either establish such a plan or enroll employees in state-facilitated individual retirement accounts (IRAs).
In Vermont, employers with five or more employees who do not currently offer a retirement plan are required to register for the state-run Vermont Saves program. Now, Maine is stepping up efforts to get more employees enrolled in retirement plans.
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This week, the state House and Senate approved An Act to Advance the Maine Retirement Savings Program legislation that requires employers with three or more employees that don’t offer a retirement plan to their employees to register with the state-run Maine Retirement Savings Program.
Under current law, private-sector employers with five or more employees that do not offer a retirement plan to their employees must register with Maine Retirement Investment Trust (MERIT). However, if Governor Janet Mills signs the bill, that would lower the threshold from five employees to three.
MERIT, which launched in January 2024, has established over 13,000 individual savings accounts for the over 2,500 Maine employers that are participating. So far, the program has a total of $11.5 million in savings for these Maine employees.
In 2023, the Maine Retirement Savings Program established a partnership with the Colorado SecureSavings Program to begin Maine’s state-run retirement savings program, which established MERIT. Delaware and Vermont joined as partners in 2024. Combined, the partnership has approximately 90,000 accounts.
There is no cost to join MERIT for Maine employers, minimal administrative requirements and no requirement for an employer match. Covered employees have 5% of their paycheck automatically contributed to a Roth IRA account.
Auto-IRA and other state-facilitated retirement options now operate in 20 states, with additional states at various stages of implementation. Since 2012, every state except Alabama has either enacted or introduced legislation that would establish state-facilitated retirement savings programs. Rhode Island RISavers program, which is a pilot retirement program administered by Vestwell, is expected to launch in 2025.
“Thanks to state action, over a million Americans who were previously unable to save for retirement through their job are now doing that, though too many hardworking people are still left behind,” said Nancy LeaMond, AARP Executive Vice President and Chief Advocacy & Engagement Officer. “Now state leaders and Congress must work to ensure every American worker has access to a retirement savings option at work where they can easily save for their future.”
Related: States with auto-IRAs: Employees are 20% more likely to contribute to retirement savings
According to AARP research, nearly half of American workers in the private sector ─ 56 million people ─ still lack access to a retirement plan through their employer. AARP has endorsed proposed federal legislation, including the bipartisan Retirement Savings for Americans Act and the Automatic IRA Act, both of which would help improve retirement security for American workers.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
