LANSING – State Representatives Barb Byrum (D-Onondaga), Joan Bauer (D-Lansing) and Mark Meadows (D-East Lansing) today threw their support behind a plan that will offer 401(k)-style retirement plans to employees in small businesses, opening the door to a secure retirement for millions of Michigan workers.
"Michigan's small businesses are the backbone of our economy," Byrum said. "It is our responsibility to ensure that our small business workers receive the fair wage, health care and retirement benefits they deserve."
"Every Michigan worker deserves a secure retirement," Bauer said. "This plan not only helps our workers establish a secure future, it will make Michigan attractive to talented workers and other small businesses. This is the right thing to do for our workers and the right thing to do for Michigan."
"We must make sure our workers can enjoy a good quality of life when they retire," Meadows said. "Small business employees are often left with expensive and often unaffordable retirement options to protect their golden years, or no options at all. Extending the opportunity to participate in 401(k)-style plans to employees of our small businesses protects our workers and will be very good for our state's economy."
Under the plan, the state will work with a private retirement investment planner to set up a 401(k)-style retirement plan and open it to all businesses, including those with as few as one employee. The private company will manage the retirement plan, much like the State of Michigan's own 401(k) plan. The businesses in the proposed plan can match employee contributions and the accounts will follow employees if they leave their jobs to work elsewhere in Michigan.
Currently, four in 10 workers say they aren't saving for retirement and 90 percent of Americans say they have financial concerns about their retirement. While a comfortable retirement requires 70 percent of pre-retirement income, Social Security provides only 40 percent of that income. [1]
The Office of Retirement Services estimates that about 2 million people will participate in the Democrats' plan. The only cost to the State is the estimated start-up cost of $559,000. The State will get the money back in five years through the plan.