AARP Fighting to Expand Massachusetts CORE Plan; A Work & Save Program for Non-Profit Organizations

AARP Massachusetts is fighting for a work and save bill that would help employees of nonprofits save for retirement.

Access to an employer-based retirement plan is critical for building financial security later in life. Yet, about 43 percent of Massachusetts’ private sector employees—roughly 1,220,000—work for an employer that does not offer either a traditional pension or a retirement savings plan.

That’s why AARP Massachusetts testified in favor of expanding the CORE Plan program - Senate Bill No. 2025 - An Act Relative To The 401(K) Core Plan and House Bill No. 3031 - An Act Relative To The 401(K) Core Program.

The CORE Plan was created because many non-profit businesses cannot afford to sponsor retirement savings programs. The CORE Plan is a tax deferred and post-tax 401(k) savings plan developed for employees of eligible small nonprofit organizations. The mission of the CORE Plan is to help Massachusetts nonprofit employees save and invest for a financially secure retirement.

Under the proposed legislation, the core plan would be expanded to include nonprofits with more than 20 people employed.

“Making it easier for people to save their own money for retirement is not just the right thing to do- it is also fiscally responsible. Cost-savings to states in the form of social services due to increased savings by individuals for retirement are significant.” said Mike Festa, State Director, AARP Massachusetts.

Festa testified in front of the State Administration and Regulatory Oversight Committee at a hearing on Tuesday, July 11. You can read the entire testimony here.

Festa pointed out certain groups of people are disproportionately impacted by a lack of access to retirement plans. The higher rate of part-time employment among women is a large factor in their low eligibility rates for employer-sponsored retirement plans. Employees of color are significantly less likely to have access to workplace retirement plans, and households of color have disproportionately lower retirement savings than white households. The contingent workforce, including gig workers, tend to also lack this critical access to employer-sponsored retirement plans.

The data shows how vital it is for Americans to have savings upon which to depend.

• Nearly half (55 million) of American workers have no access to a retirement savings plan through their employers. 
• 70% of workers employed by businesses with fewer than 100 employees do not have a pension or retirement plan
• The average household only has $2,500 saved for retirement.
• The average household that is near retirement has only $14,500 in savings.

Under Work and Save programs, employers will have access to a low-cost, simple retirement savings option. Research shows that many small businesses want to offer a retirement savings plan to help their employees save for the future but can’t, because how expensive and time consuming it can be. Work and Save changes that.

The Senate bill is sponsored by Sen. Joan Lovely, D-Beverly.
The House bill is sponsored by Rep. Ann-Margaret Ferrante, D-Essex