State Reps Study Access to Retirement Savings Tools
Mike Seals - August 20, 2020 10:48 pm
OKLAHOMA CITY – State Rep. Marcus McEntire, R-Duncan, and State Sen. John Michael Montgomery, R-Lawton, today held an interim study examining ways to increase access to retirement savings tools for people that currently do not have access to a plan through their employer. The joint study was hosted by the House Banking, Financial Services and Pensions Committee and the Senate Retirement and Insurance Committee.
The two said studies show that more than 50% of working Oklahomans currently do not have a retirement benefits package in place.
“This has long-term consequences not only for these individuals who will suffer quality-of-life issues when they retire without adequate benefits in place,” McEntire said. “But this potentially harms state taxpayers as a whole as a demand on their tax dollars is made to help with the cost of health care coverage and other services needed by an aging population.”
Montgomery, who authored Senate Bill 1890 last session, said helping Oklahomans better plan for retirement improves Oklahoma’s long-term fiscal picture as well.
“Ultimately, it is just fiscally prudent to encourage savings for individuals,” Montgomery said. “Estimates indicate that enhanced retirement savings would save hundreds of millions in taxpayer dollars over the next couple of decades and bolster our state economy. Enabling individuals to better secure their financial future means they will be able to participate in health care of their choice longer, have an additional income source, and less likely to draw down lesser Social Security benefits earlier.”
Senate Bill 1890, of which McEntire was the House author, sought to establish the Oklahoma Sooner Choice Trust Program Fund, which would have been used to administer individual retirement accounts made optional to people employed by small businesses. Under the proposal, employees would have been able to choose to have at least 3% of their pay automatically withheld to be invested on their behalf. They also would have been able to select options for investment vehicles, ranging from conservative to more aggressive. Employers would not be mandated to match funds contributed by employees.
The bill was sidelined when work at the Capitol ceased for six weeks this spring during the onset of the COVID-19 pandemic.
The legislation enjoyed bipartisan support and earned the endorsement of State Treasurer Randy McDaniel, but some expressed concerns that the program might be an overreach of the state into the private business sector. The lawmakers said they requested the interim study to address the concerns and explore more tools that could be useful to small businesses that wish to offer their employees a retirement plan using statewide leverage to help.
Representatives from AARP participated in Thursday’s study. The group recently conducted a study that revealed that of 500 Oklahoma businesses that employ fewer than 100 people, 68% offered no retirement savings plan. An additional 72% of state businesses with fewer than 10 employees offered no such plan.
“We greatly appreciate Senator Montgomery and Representative McEntire tackling this important issue,” said Joe Ann Vermillion, AARP Oklahoma Volunteer State President. “We know half of all Oklahomans lack access to a retirement savings program through their employer and that number jumps to 70% when an employer has less than 50 employees. With the retirement savings gap growing, the cost of doing nothing is too great. Helping employees of small businesses secure their financial future will pay significant dividends to our state.”