New Bill Would Help 700,000 Minnesota Workers Save for a Secure Financial Future

From small-business owners to industry CEOs, engineers to elementary school teachers, Americans from all walks of life want the opportunity to build reliable retirement savings. The Minnesota Secure Choice Retirement Program Act could help the approximately 718,000 Minnesota private-sector workers who currently do not have access to a retirement savings plan through their place of employment gain access to a more secure financial future.

Introduced by State Senator Sandra Pappas (DFL-65) and Representative Jamie Becker-Finn (DFL-40B), the Minnesota Secure Choice Retirement Program Act would establish an automated savings program that would automatically enroll workers in an individual retirement account (IRA) in which a portion of their wages would be set aside every pay period. These types of programs, also known as auto-IRAs or “work and save” programs, allow employees to take control of their financial security by customizing their savings to meet their future needs. This includes the ability to change how much they contribute, the types of investments they want to make, and whether to stay in the program or opt out—which they can do at any time.

Through this bill, hundreds of thousands of workers will not only gain financial security and independence, but they will also gain a vital cushion against financial shocks, such as medical emergencies or unexpected loss of income. With more than half of U.S. households likely to experience at least one significant financial setback every year, being able to withdraw money from a savings fund could serve as a lifeline for numerous families and individuals.

Like other employer-based retirement plans, the program still relies on employees’ voluntary regular payroll contributions to fund their IRA. However, rather than requiring employers and small businesses to take on the heavy burden associated with the high startup costs and lack of administrative capacity for these plans, the Minnesota Secure Choice Retirement Program Act would allow businesses throughout the state that do not already sponsor a retirement savings plan to easily enroll their workers into the automated savings program—at no cost to the employers.

The Minnesota program would be a public-private partnership with state oversight and private financial firm management, enabling businesses to opt out by adopting their own retirement plan at any time. In a tight and competitive economy and labor market, giving small-business owners the ability to offer employees a retirement savings plan could help businesses recruit and retain quality personnel—helping them grow and thrive in a tough environment that has forced many small businesses to close their doors in recent years.

Minnesota is not the first state to consider such a bill. Twelve states have passed similar legislation to tackle this growing economic concern, and many more have introduced bills to create retirement programs. And businesses and workers are not the only beneficiaries of auto-IRAs. Taxpayers also benefit, because when an individual has insufficient retirement savings, they’re more likely to turn to state and federal social assistance programs, which are typically funded by taxpayer dollars. So, putting the power and responsibility to save into the hands of individual workers could pay financial dividends to Minnesotans for years to come.

An automated savings retirement program, such as the one detailed by the Minnesota Secure Choice Retirement Program Act, not only fills a need for Minnesota workers, but it also offers a solution designed with employees, employers, and taxpayers in mind. No matter their background, expertise, or professional title, all American workers deserve access to a retirement savings fund, a crucial component of their financial security.

This op-ed was first published in Minnesota Reformer on March 17, 2022.

John Scott directs The Pew Charitable Trusts’ retirement savings project.