Michigan Senate Dems pass bills to expand access to state-run retirement savings program

The 1.5 million Michigan residents without access to a retirement plan could soon gain future financial security.

Michigan Senate Democrats passed two bills creating the Retirement Savings Act, which would give Michigan residents access to a retirement savings account if their employer does not offer one.

Bills 807-808, passed in Michigan's Senate on June 17, would create the Michigan Secure Retirement Savings Program.

Employees in Michigan who do not currently have a retirement savings plan would be automatically enrolled in a state-run Roth IRA, and employees can opt out if they choose. Senators Mary Cavanagh, D-Redford Twp., and John Cherry, D-Flint, sponsored the bills.

"Far too many people work tirelessly their entire lives only to find themselves without the savings needed to retire with the dignity and peace of mind they've earned," Cavanagh said. "Our legislation would not only empower 1.5 million Michigan workers to plan and save for their futures — it would also strengthen our economy, reduce reliance on public assistance, and empower seniors to age with independence and financial security." 

Forty-two percent of Michigan's private-sector employees aged 16 to 64 lacked access to employer-sponsored retirement plans as of 2022, according to the bill's summary.

Many small business owners struggle to provide retirement plans, according to a Senate legislative analyst, and Americans are growing increasingly worried about their financial security in retirement.

"By helping more than 1.5 million workers save for the future, this legislation would reduce senior poverty, help small businesses stay competitive, and strengthen our state's long-term economic stability," Cherry said. "Most importantly, it will give more people financial security as they age." 

Aside from creating a state-managed retirement savings plan, the bills also establish fines of up to $5,000 for employers who refuse to participate in the plan.

These fines would contribute to the Secure Retirement and Administrative Fund, which pays the administrative costs of maintaining the program.

Bill 808 creates a seven-member board overseeing the program, consisting of leaders chosen by the state treasurer, a leader from the Department of Technology, Management, and Budget, and leaders with experience in retirement savings plan administration. 

Sen. Thomas Albert, R-Lowell, spoke against the program due to concerns about what additional regulatory burdens could do to businesses and that retirement is a matter of personal responsibility that does not apply to the state.

The bills will now go to Michigan's House, where they will be reviewed by the Economic Competitiveness Committee.

CBS News Detroit has reached out to Albert, as well as Rep. Mike Hoadley, R-Au Gres, and Sen. Aric Nesbitt, R-Porter Township, for comment.