NAIFA strongly supports efforts to encourage and incentivize workers’ participation in employer-provided retirement plans available on the private market. Private-sector plans offered by employers provide many design features that help workers plan for secure retirements. A qualified financial professional, such as a NAIFA member, can help workers with individual retirement-planning solutions and assist employers in establishing workplace plans.
State-run retirement plans, such as one currently under consideration in Oklahoma, however, create employer mandates and liabilities that may prove particularly difficult for some businesses facing economic uncertainty or hardships due to COVID-19. These plans pass the administrative and operational costs on to the employee savers, do not provide ERISA protections required in the private sector, do not allow employer matching of contributions, and have limited investment options.
NAIFA, along with the American Council of Life Insurers (ACLI) and several other organizations, has sent a letter to members of the Oklahoma Senate Finance Committee urging legislators to reject SB 527, the legislation that would create an Oklahoma state-run retirement plan.
“It’s important for elected officials to find ways to help more workers access retirement plans,” the letter says. “However, SB 527 is not the answer. Plans under way in other states are proving to be risky for workers and a financial burden for taxpayers. And this COVID crisis is no time to impose a new mandate on employers to reduce worker wages by 3%.”
Employers in Oklahoma and across the United States have better opportunities than ever before to offer employees robust retirement plans in a cost-effective manner. The federal SECURE Act, which NAIFA strongly supported, became law in December 2020 and offers tax credits and other market-based incentives for small employers. Effective January 2021, modifications to multiple employer plan (MEP) rules make it likely that many more employers of all sizes will elect to participate in MEPs. The new law significantly reduces the expense, administrative burden, and other hurdles associated with "old" MEPs. These new incentives and rules likely mitigate the supposed need for state-run plans. NAIFA believes that waiting to see how the marketplace responds to the availability of MEPs and the new tax incentives, and until the economy is fully recovered from the consequences of the pandemic, makes sense for everyone.
“We appreciate the senators’ interest in encouraging more Oklahomans to prepare for financially secure retirements and helping employers offer plans,” said NAIFA State Chapter Director Julie Harrison. “Unfortunately, state-run plans like the one SB 527 would establish often create more problems than they solve. NAIFA is always happy to work with legislators on other policy options for promoting retirement savings in Oklahoma.”