Rhode Island Becomes 20th State to Pass Retirement Savings Program

The Rhode Island legislature passed a bill to launch a new auto-IRA program—the RI Secure Choice Retirement Savings Program—making it the 17th auto-IRA program in the nation and the 20th retirement program for private-sector employers. 

The bill passed on Tuesday with bipartisan support, 35-1 in the Senate and 65-8 in the House. It now goes to Governor Daniel McKee for further action.  

First introduced on January 12, the bill, SB 2045, established the Secure Choice Retirement Savings Program to be administered by the general treasurer for the purpose of “promoting greater retirement savings for Rhode Island private-sector employees in a convenient, voluntary, low-cost and portable manner.” 

Under the bill, Rhode Island private-sector employers with five or more employees would be required to offer a retirement plan to their employees, which can be satisfied by offering any type of retirement plan, such as a 401(k).  

The bill is sponsored by Senators Meghan Kallman (D), Frank Lombardi (D), Dominick Ruggerio (D), Melissa Murray (D), Sandra Cano (D), Jonathon Acosta (D), Gordon Rogers (R), Mark McKenney (D), Dawn Euer (D) and Tiara Mack (D). 

The treasurer would be in charge of collecting contributions to any auto-IRAs through payroll deductions and investing those funds in accordance with best practice for retirement savings vehicles. 

The act becomes effective for all eligible employers within 36 months of the program enrollment opening, following a phased implementation period.  

According to Georgetown University’s Center for Retirement Initiatives, around 189,000 private-sector employees in Rhode Island lack access to a retirement savings plan at work. Out of the 412,000 private-sector employees in the state, this signals a 46% access gap.  

This issue is particularly prevalent among those who work for the smallest employers, as about 96,000 workers at companies with less than 25 employees do not have access to a retirement plan.  

The CRI also found that expanding access would grow workers’ savings, estimating that an auto-IRA program that does not exclude employers with less than 10 employees would provide access to 109,000 additional savers, with average contributions of $2,710, totaling to around $300 million in contributions by the year 2040. Savings could be further enhanced through other incentives, such as the refundable federal Saver’s Tax Credit. 

As of May 31, state programs across the U.S. have accumulated more than $1.5 billion in assets administered in more than 879,000 funded accounts and 214,000 registered employers. 

According to Angela Antonelli, executive director of the CRI, as of June 11, ten state programs are currently open to all eligible employers and workers in their states. 

Two additional auto-IRA programs, in Delaware and New Jersey, are currently in pilot phases and will be open to all eligible employees on July 1 for Delaware and June 30 for New Jersey.