Retirement bill approved by committee
Legislation would create state-run, voluntary saving plan for private sector
A legislative committee on Monday endorsed legislation aimed at increasing the number of employers in Arkansas that provide a retirement plan for their employees.
With only state Sen. Jason Rapert, R-Conway, dissenting, the Joint Committee on Public Retirement and Social Security Programs recommended House and Senate approval of an amended version of House Bill 1349, sponsored by Rep. Les Warren, R-Hot Springs, which would create the Every Arkansan Retirement Plan Opportunity Act.
Warren said about 530,000 people in Arkansas currently have no access to a retirement plan through their employers, so they are not saving funds for retirement.
“When a person reaches retirement and has not saved they realize they cannot survive on Social Security alone,” he said. These people can either go back to work or have “a hand out asking for government assistance, or worse, depend on family members for help, and neither one of those are accepted options. But it is what many of our fellow Arkansans face today when they retire.
“This bill will create a retirement plan for employers without a current retirement plan to offer to their employees. It is a voluntary plan that features payroll pay deduction, a big key to saving. It would be run by the state treasurer’s office, much like the 529 college savings plan is now.”
The employer would sign up for the retirement plan that would be automatically available to each employee, under the bill, he said. The retirement plan calls for an automatic payroll deduction of 5%. Each employee would have the option to opt out of the plan, he said.
Warren said if an employer had a retirement plan in the past two years that employer would not be eligible to participate in this plan.
“When I was working with the bankers association, one thing that I made clear was that we wanted to be a partner, not to be working in opposition,” he said.
“What the bankers association loved about this is we were basically an incubator program for retirement plans, so when an employer who signed up, if their aggregate assets grew up to $600,000 or more [in their retirement plan], they have to get their own,” Warren said. “So basically we would be growing a plan for the private sector to bid up at some point.”
He said the bill would allow individuals to roll over up to $75,000 into the plan.
Warren said the bill has been vetted by the Arkansas Bankers Association and the National Association of Insurance and Financial Advisers, and he has had conversations with Stephens Inc. and numerous small businesses and individuals. He said that Gov. Asa Hutchinson supports the bill.
Afterward, Lorrie Trogden, president of the Arkansas Bankers Association, said that “while neutral on the bill, the Association does support including an aggregate asset cap.”
To Warren, Rapert said: “The bottom line is is that everything you talk about today is available in the private market today.”
He said he has a difficult time understanding why the state “needs to suddenly become a player or an option out here in the face of all the people in the private market that offer these all over the country and in the state of Arkansas.”
“Every time, I have looked at this it is not a situation where there is a lack of opportunity,” Rapert said. “It is a lack of money, … so it is not that there is a lack of opportunity for people to have these.”
Warren said that “we are looking at the same statistics we had last General Assembly [in 2019], so what I am seeing is we are not still reaching the population.”
“What we are doing is giving employers a chance in a market today where employers have difficulty providing insurance and retirement plans to their employees, so we are addressing one of those avenues of saying here is a way that you can offer a retirement plan to your employees,” he said.