LANSING – State Representatives Tim Melton (D-Pontiac), Marie Donigan (D-Royal Oak), Paul Condino (D-Southfield), Aldo Vagnozzi (D-Farmington/Farmington Hills), and Andy Meisner (D-Ferndale) today announced 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 workforce is made up of the hardest working people in the country," Melton said. "These employees deserve a fair wage, health care and a secure retirement. We need to make it as easy as possible for small businesses to provide these benefits so that all workers can retire with the confidence that their lives will be comfortable."
"As a small business owner, my time is consumed with growing the business," said Sam Hannah, who owns A and P Communications in Pontiac. "The proposal makes investing into a 401(k)-plan easy to do and affordable. Offering a retirement benefit is a powerful incentive that will help me retain and attract employees."
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 401(k)-plan.
"People who dedicate themselves to their small business careers have worked and deserve a secure retirement," Donigan said. "Too many people in Michigan lack access to a retirement plan, and expanding 401(k)-style plans to small businesses will provide a good quality of life for workers when they retire."
The businesses in the proposed plan can match employee contributions and the accounts will follow employees when they leave their jobs to work elsewhere in Michigan. The House Democrats'
proposal is scheduled for a hearing with the New Economy and Quality of Life committee this week.
"We must do better for our workers who make up the heart and soul of Michigan's economy," Condino said. "Our plan is geared specifically to help small businesses provide retirement plans for
their workers where they currently have none. We want our workers to enjoy their retirement and not worry about their finances when they're in their 60s and beyond."
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
"Unfortunately, there is a crisis of too many workers sliding into poverty during their senior years," Vagnozzi said. "Social Security no longer provides enough to ensure a secure retirement. We believe the problem can be fixed and our plan will help do that."
The Office of Retirement Services estimates that about 2 million people will participate in the Democrats' plan. The only initial 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.
"This proposal sends the message that no Michigan worker will be left behind in their golden years," Meisner said. "The American dream needs to be attainable for all of the men and women who work hard in this state. Our goal is to help every citizen save now so they can enjoy a better tomorrow."