• The Democrat-led Michigan Senate on Wednesday passed legislation to create state-managed retirement savings accounts
  • The bills would require private sector employers who don’t already offer retirement plans to participate, while employees can opt out
  • Each bill passed in bipartisan votes, and the package now heads over to the Republican-led House for further consideration

LANSING — A split Michigan Senate on Wednesday passed legislation requiring the state Treasury to create automatic retirement savings plans for private sector employees who currently lack them. 

The two-bill package passed the Senate in 20-18 party-line votes.

While the bills would not impact employers already offering retirement plans, those who do not — and also knowingly choose not to participate in the state-offered process — could be found guilty of a misdemeanor and fined up to $5,000.

Only the employee could choose to opt out of the state program.

“Failing to properly save for retirement increases the risk that seniors will live in poverty and places a greater burden on social services,” state Sen. John Cherry, D-Flint, said in a floor speech ahead of the votes. 

“By offering simple, accessible saving options for Michigan workers, we are helping a new generation of seniors and retirees live more comfortably and with dignity.”

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As of 2022, 42% of Michigan’s private sector employees aged 16 to 64 did not have access to an employee-sponsored retirement plan, according to state Senate fiscal analysts. 

Only one person, Republican state Sen. Thomas Albert, of Lowell, spoke in opposition to the legislation, which he said was a “worthy goal” but could come with additional regulatory burdens for Michigan businesses and leave employees with less money in their pockets in cases of emergency.

“People can already save for retirement on their own if their employer doesn’t offer a retirement plan,” Albert added, saying that the topic was more “an issue of personal responsibility and personal freedom, not a matter for state government.” 

At least a dozen other states have already adopted similar “auto-IRA” programs, “and what they have found is … it makes it simply easier to save for retirement,” said Cherry, lead sponsor on one of the two bills. 

Referred to in the bills as the Michigan Secure Retirement Savings Program, the initiative would be established as a trust outside the state Treasury and managed as a pooled investment. 

The trust would be overseen by a new, seven-member board comprising:

  • The state treasurer, or a designee of his or her choosing. That person would also chair the board.
  • A designee of the state treasurer.
  • The director of Michigan’s Department of Technology, Management and Budget, or his or her designee. 
  • Two public representatives with expertise in retirement savings plan administration or investment, or both. Those roles would be appointed by the governor with the advice and consent of the state Senate.
  • A representative of participating employers, which are defined within the legislation that creates the program.
  • A representative of enrollees, again as appointed by the governor and with the advice and consent of the Senate.

Board members would not be paid for their roles, but could be reimbursed for “necessary travel expenses incurred in connection with their board duties” under the legislation. Appointed members would also serve anywhere from two to four years, depending on their role.

As for the trust itself, each Jan. 1 the board would be required to report concerning contributions, investment, withdrawals, and balances of the enrollee’s account. The board would also be required to set maximum and minimum contribution amounts “in accordance with limits established for IRAs” in accordance with the federal internal revenue code.

The bills now head over to the Republican-led House for further consideration. 

A request for comment left with House Speaker Matt Hall, R-Richland Township, regarding the likelihood of the bills being taken up for a vote was unreturned by time of publication.

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