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Delaware Considers Secure Choice Program


Delaware has joined the growing list of states that are considering offering workplace retirement savings programs for private-sector employees, but in a significant twist, it may require that employees opt into the program.
 
 

Delaware Considers Secure Choice Program


Delaware has joined the growing list of states that are considering offering workplace retirement savings programs for private-sector employees, but in a significant twist, it may require that employees opt into the program.
 
Bipartisan legislation has been introduced in the Delaware House of Representatives to create the Delaware EARNS program, short for “Expanding Access for Retirement and Necessary Savings.”  The bill, H.B. 205, originally provided for automatic enrollment, like other so-called auto-IRA plans. However, it was amended in the House Appropriations Committee on June 21 to require that employees must affirmatively opt in to the program. Amendments also clarified that employees aren't covered until they've been with their employer for at least 90 consecutive days.
 
In announcing the program in May, Delaware State Treasurer Colleen Davis had emphasized the importance of the auto-enrollment feature. “Workers benefit immediately by being automatically included in a retirement plan,” she said. “Programs like Delaware EARNS that use auto-enrollment have a 92% participant rate compared to 61% for plans with just a voluntary rate,” she explained before the amendment was made.
 
According to Davis, nearly 54% of Delaware businesses don't offer employees a way to save for retirement, leaving 200,000 without this benefit. Payroll deduction is widely recognized as the most effective method to encourage long-term savings.
 
Delaware EARNS would be modeled the SecureChoice plan advocated for more than a decade by NCPERS. Businesses with more than five employees would be required to participate in Delaware EARNS through a simple payroll process; the state Treasurer's Office would take it from there.
 
The proposed legislation, H.B. 205,  was introduced May 20 and sent to the House Appropriations Committee on June 10, where it was been amended twice. On June 11, language was added to clarify the responsibilities and authority of the program board.

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