As more Minnesotans get grayer, fewer are expected to be able to retire comfortably.
It’s what Rep. Jamie Becker-Finn (DFL-Roseville) calls a “retirement crisis.”
A small-business owner herself, Becker-Finn proffers an idea that could help employees and employers.
As amended, HF782 would establish the Minnesota Secure Retirement Program that’d help employees better prepare for their golden years.
An employer that does not sponsor a retirement plan would transmit a percentage of the employees pay on an after-tax or pre-tax basis to a state-sponsored individual retirement account. Minimum and maximum contribution rates would be set by a seven-member board of directors created by the bill. The program would begin by Jan. 1, 2025. A fiscal note shows a $2.24 million cost in the 2024-25 biennium.
Program participation would be mandatory for employers that do not sponsor a retirement savings plan for their employees, however, employees could opt out of participation.
“We want to make sure all Minnesotans have access to retirement savings,” said Becker-Finn. It is estimated almost one-third of private-sector workers — approximately 700,000 — in Minnesota are employed by a business that does not offer a retirement plan. Nationwide, she said, almost half of all Americans near age 65 have less than $25,000 saved; 25% have less than $1,000.
The bill was approved on a split-voice vote Thursday by the House State and Local Government Finance and Policy Committee and sent to the House Judiciary Finance and Civil Law Committee. More than one Republican spoke in support of the concept, but each believes the bill needs to be less onerous on small businesses.
Rep. Jim Nash (R-Waconia) unsuccessfully offered an amendment to require a minimum of 50 employees for business participation, but he and other Republicans are open to another number. In six of eight states where a similar program exists the range is five to 25.
Mathew Graske co-owns Caydence Records & Coffee. In a letter, he said the bill would be a way to help keep his 10 quality employees.
“They deserve to retire comfortably. I would love for them to be able to continue working for our small business and to grow individually, sharing their skills to help grow the business collectively. My wish is that they can live with a lesser burden of wondering if they should find employment elsewhere because larger companies have the financial capability to offer benefits, whereas small businesses, us included, often could never afford to provide these programs to their staff.”
Letters of support also came from the Minnesota Council of Nonprofits, Minnesota Council on Latino Affairs, Minneapolis Regional Chamber, Men in Black Security, and the executive director of Meadow Park Preschool and Child Care.
However, a representative of the Minnesota Chamber of Commerce is not as enthusiastic because of the bill’s potential effect on small-business owners, including penalties being set by a board, implementation timeline, and the lack of a small-business exemption.
“This bill would be added onto all the other new employee mandates we’ve seen move this year,” said Beth Kadoun, the vice president of tax and fiscal policy, citing earned sick-and-safe time as an example.