MN Secure Choice Retirement Act

ST. PAUL, MN – Sen. Sandy Pappas (DFL-St. Paul) and Rep. Jamie Becker-Finn (DFL-Roseville) along with small business owners, AARP, SEIU, and numerous stakeholders unveiled the Minnesota Secure Choice Retirement Act, a real solution to address the uncertainty regarding saving for retirement.

The Minnesota Secure Choice Retirement Act would establish a new retirement program at the state that would offer two options to employers who do not currently sponsor a retirement savings plan for their employees.  One option is the Secure Choice Individual Retirement Account Plan (IRAP). Under the IRAP, an employee’s payroll deduction contributions would be automatically transmitted to an individual retirement account established for the employee, with the contribution rates established and designed by a newly established board.  Employees would be 100 percent vested in their retirement savings from the very beginning at the lowest possible expense to employees, employers and the state. Employees would direct the investment of their accounts into an array of investment funds supervised by the State Board of Investment.

The second option would be set up as the Secure Choice Multiple Employer Retirement Plan (MERP), which is a 401(k)-defined contribution plan sponsored by the state, and made available to any employer in the state who wishes to participate. Employers could adopt the plan for their workforce, at minimal cost and essentially no fiduciary liability to the employer. Employee payroll deduction contributions as well as employer contributions could be made to the MERP, depending on the plan adopted by the employer. As under the IRAP, employees would be able to direct the investment of their accounts.

“Unfortunately, many Minnesotans do not feel financially prepared for retirement,” Sen. Pappas said. “The MN Secure Choice Retirement Act offers smart, low cost options to minimize barriers to retirement savings faced by workers whose employers do not offer a retirement savings plan. It’s critical to encourage people to plan and save for retirement and ensure they can easily do so, and the best way to do that is through a workplace retirement savings plan. Simply having access to a retirement plan at work increases savings rates by a staggering 1,300 percent.”

The state is uniquely situated to be able to offer a basic retirement plan, which would be similar to state-run college savings plans (known as 529’s). Not only is the state able to take advantage of professional management and pooled investments in a way that individuals often cannot, but government has motivation that private business does not. The state will ultimately be responsible for meeting the basic needs of retirees who are unable to do so in their retirement. It behooves the state and its taxpayers to take immediate action.

“This plan will leverage a large pool of investment assets under the professional management of the State Board of Investment to achieve relatively lower fees and access to a greater variety of financial products,” Representative Jamie Becker-Finn said. “In addition, it provides security that an employee retirement savings account can be taken from one employer to the next, should they change jobs.”

The MN Secured Choice Retirement Plan is not a defined benefit pension plan. It does not offer employees a guaranteed monthly income or guaranteed rate of return. It is a tool to facilitate individuals saving privately. As this is a defined contribution plan, it will not create a long-term liability for the state and will not be connected in any way to the state’s public pension plans.

According to a recently released AARP poll, more than one-third of Minnesotans (36 percent) feel they are behind schedule for planning and saving for retirement. Half of respondents feel anxious about having enough money for retirement and 84 percent wish they had more money saved for retirement. Almost 79 percent of those not offered a retirement savings plan at work would take advantage of a way to save for retirement at work if offered.


Senator Sandy Pappas
Sandy Pappas represents District 65, which includes portions of Saint Paul in Ramsey County in the Twin Cities metropolitan area.

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