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Rhode Island, It's Time for Work & Save

Work & Save legislation, which would give thousands of Rhode Islanders access to tax-deferred payroll savings plans, was introduced in the RI House on Friday, April 14. No date has been set for a hearing before the House Labor Committee.  Review this year's bill: H-6125-17- Work and Save

Our testimony will include the results of a 2016 RI SBO FINAL Annotated Questionnaire that indicates 70% of small business owners support creating a basic retirement savings plan for small businesses. And 82% say they agree state lawmakers should support a plan making it easier for small business owners to offer employees a way to save.

In addition, the poll shows widespread, non-partisan agreement that Rhode Islanders need encouragement to save more for retirement.


WS Small Business


2016 Work & Save Testimony

Although the 2017 bill is different, the need remains the same

Money jar with retirement label.

Testimony by AARP Associate State Director John DiTomasso
H-7219 – Private Employer IRA Program
House Labor Committee
January 28, 2016

Mr. Chairman, members of the committee my name is John DiTomasso and I am an Associate State Director of Advocacy for the Rhode Island Office of AARP. On behalf of AARP Rhode Island and our 130,000 members in the state, AARP is pleased to testify in support of H 7219. If passed, this bill would establish a Private Employer IRA Program.

As it stands today, one out of two households are at risk of having a financially insecure retirement.


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Financial insecurity does not mean missing out on a retirement of leisure or travel, but rather that middle-class households will be unable to afford food, medicine, and utilities.

According to the National Institute on Retirement Security, the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households.  Three out of five families headed by a person 65 or older have no money in retirement savings accounts.

If this worries you, you are not alone. The overwhelming majority of Americans are anxious about their retirement prospects, with some 85% being concerned that current economic conditions are impacting their ability to achieve a secure retirement.

This predicament is due in large part to a lack of access to retirement plans at work. We know that when offered the opportunity to save for retirement at work; over seven out of ten people take advantage of it.  Individuals are 15 times more likely to save if their employer offers a plan, as only 5% of workers without access to a retirement plan via their employer go out on their own to open an IRA.


Taken together, these facts mean that future retirees are likely to be over-reliant on Social Security. Social Security is the only source of income for one in three Rhode Islanders age 65 and older. Social security makes up 50% or more of income for 65% of Rhode Islanders age 65 and older. Now let’s also keep in mind that there will be serious solvency issues with social security if something isn’t done.

As one can see Social Security alone will not provide enough to pay the bills during retirement. If nothing changes, Social Security will likely be the main source of retirement income for most middle-class retirees going forward.

If the State does not act now, taxpayers will ultimately face higher social safety net program costs in the decades to come.

A current myth is that individual retirement accounts have been on the increase in the private sector. In truth only 55% of private sector workers have access to retirement plans at work. This is the same percentage as 25 years ago.

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You may hear that there is already a federal solution to this problem: myRA. While myRA is an additional tool in our retirement security toolbox, it is not a panacea. Nationwide, myRA is not broadly available to workers and its use is not automatic. Investments are limited only to bonds, preventing savers from taking full advantage of the market. Furthermore, individuals can only set aside $15,000 in their accounts before hitting a savings cap.

There are simple steps that can be taken to divert this trend. The best way to improve retirement security is to ensure that everyone who works has access to a low- cost, professionally managed retirement plan that enables them to save automatically out of every paycheck. Bill H-7219 before you today does that.

The bill requires an automatic enrollment payroll deduction into an IRA which is a crucial component to the intent of the bill. This feature increases the participation rate to 90% which means only 10% of the employees voluntarily opt out of an automatic enrollment plan. However, only 5% of workers without access to a retirement plan via their employer go out on their own to open an IRA.


A national wave is being created by this issue and state legislatures are scrambling to address it. AARP expects over twenty states to address the issue of private sector retirement security this year (slide #4). Rhode Island can be a real leader by passing the bill before you today. We ask this Committee to affirm your commitment to financial security for Rhode Islanders by passing H-7219.


Testimony by AARP Rhode Island State President Alan B. Neville

Alan B. Neville_RI State President

Dear Chairman and Members of the House Labor Committee:

As volunteer State President of AARP Rhode Island, I am pleased to submit this testimony in support of House Bill 2016 – H7219 Private Employer IRA Program.

Since its inception more than a half century ago, AARP has worked tirelessly to help ensure that all Americans attain financial security in retirement. Indeed, financial security in retirement is at the heart of and provides the foundation for everything AARP espouses. In whole or in part, financial security ensures that an elderly person will age with dignity, have the resources necessary to make appropriate decisions regarding housing and healthcare and ensures that he/she will not be a burden on family or the state. Clearly the notion of a comfortable, productive retirement is reduced to nothing more than a pipe dream for someone who can barely make ends meet.

Today, our entire retirement system is under pressure:

  • Social Security and Medicare, which offer an important foundation to financial security in retirement, are facing serious financial pressures, and in the absence of corrective actions will be unable to cover promised benefits to current and future retirees.
  • Dwindling pension benefits, first felt by private sector employees, and now emerging as a trend in the public sector, will continue to erode financial security for the segment of retirees who had counted on such plans.
  • At the same time, the financial inadequacy of defined contribution plans, which have largely replaced defined benefit plans in the private sector, shift responsibility for critical financial planning decisions onto workers who are often-times ill-equipped to make such decisions, adding volatility and uncertainty to personal investment results.
  • But most troubling of all, is that a vast percentage of Americans, including residents of Rhode Island, work for employers who don’t provide any retirement benefits for their workers. If this continues, a huge percentage of the population is destined for post-retirement poverty. What’s more, advanced age, increasing frailty and illness will offer these retirees little hope of engaging in any employment activity that could improve their economic situation post-retirement. Ultimately the societal cost of such a situation, if left unchecked, will be catastrophic.


As such, AARP-RI applauds the intent of House Bill 2016-H7219. As proposed in the bill, the automatic enrollment payroll deduction IRA program which will be established and administered by the state Department of Labor and Training (DLT) will offer employees a simple way to save for retirement, encourage self-reliance and achieve greater retirement savings among those private sector employees who do not currently have access to workplace retirement savings plans. Furthermore, “the automatic enrollment” feature of the plan that the legislation calls for will greatly enhance participation rates, while the “opt out” feature remains available to what we hope will only be a very small percentage of workers who make a conscious decision not to participate.

AARP is also pleased that the bill’s authors have included details regarding the employer and employee enrollment processes, and is particularly supportive of the proposed information packets which will be made available to employer and employee participants as well as the provisions that have been made for oversight of the program by the DLT.

AARP research reveals that 57 million Americans have no access to a retirement savings plan through their employers – that’s over 50% of the 18 to 64-year-old population. Let’s take a leadership position here in our state, and pass legislation during this session that brings the automatic enrollment payroll deduction IRA program to Rhode Island workers who do not currently have access to such savings plans. In so doing, we’ll be taking an important step in achieving financial security in retirement for all.

AARP is pleased to offer our legislators further consultation regarding the very important subject of financial security in retirement. Please feel free to contact our Rhode Island Office at 401-248-2655 at any time.

Thanks again for providing AARP the opportunity to offer this commentary.


RI_PPI Retirement Savings Data_Aug 2015


Rhode Island Work and Save fact sheet

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