Wednesday, June 29, 2022 |
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A bill that would help state residents plan for their retirements has passed its committees in the State Senate with broad support.
Senate Bill 3289 proposes a state-managed Hawaii Retirement Savings Program that would allow employees who are not enrolled in an employer-sponsored retirement plan to automatically have a portion of their paychecks deposited into an individual retirement account, or IRA.
On Wednesday, the Senate Ways and Means Committee voted unanimously to pass the bill, allowing the measure to cross over to the House after it passes third reading in the Senate.
Discussion during Wednesday’s committee hearing was nonexistent, with the committee voting immediately to pass the bill with minor amendments.
But testimony submitted to the hearing was almost universally positive. Keali‘i Lopez, State Director for AARP Hawaii, wrote that Hawaii households are extremely insecure in their retirement savings, with the typical working household only having saved about $2,500. Those closer to retirement still have an average of $14,500 saved.
Because it is not financially feasible for some small businesses to set up their employees with retirement plans, many workers must take it upon themselves to save for retirement, but many do not, Lopez wrote.
“While individuals can establish and contribute to a retirement savings program on their own, the vast majority do not,” Lopez wrote. “The fact is only one in 20 people will go out on their own to do the research and complete the process to set up IRAs for themselves. Studies show that workers are 15 times more likely to save for their future if they can save through payroll deduction at work, and 20 times more likely if that savings is automatic.”
Lopez estimated that about 216,000 Hawaii residents currently have no easy access to a 401K, accounting for about 50% of the state’s private sector employees.
Several state agencies, including the Hawaii Executive Office on Aging, the Department of Labor and Industrial Relations, the Department of Human Services and more supported the intent of the bill, although they suggested minor alterations for clarity’s sake.
Only two organizations submitted testimony opposed to the bill: the National Association of Insurance and Financial Advisors, and the American Council of Life Insurers. Both organizations wrote that employers have access to inexpensive retirement plans for their employees, and NAIFA suggested that the resources allocated by the bill — the current draft of the measure calls for a budget of $813,600 this year — would be better spent on education and outreach programs.
With the measure having passed its second and final Senate committee, it awaits third and final reading before the full Senate before crossing over to the House.
Email Michael Brestovansky at email@example.com.
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