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Retirement Security Commission 2.0

A new legislative task force similar to one appointed a year ago will take another stab at developing a mandatory retirement program for private sector employees.

The 19-member ad hoc group created by House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller Jr. will attempt to build on the work of an earlier group and failed legislation from the previous two years and develop a recommendations that will be used to create an opt-out retirement program for private sector employees.

Sen. James C. Rosapepe, D-Prince George’s and Anne Arundel Counties, called the appointment of the commission a “turning point in our efforts to make a big difference in retirement security for Maryland working families.  The fact that the leadership has embraced this cause and that U.S. Secretary of Labor Tom Perez has pledged the federal government’s commitment to help makes me optimistic that we can draft and pass retirement security legislation in the 2016 legislative session.”

Rosapepe, who will serve on the commission, has sponsored legislation to create a mandatory retirement plan in each of the last two sessions. Under Rosapepe’s plan, company’s with five or more employees would have to offer employees a qualified retirement savings plan or participate in a state administered retirement system. Employees  would be automatically enrolled for a 3 percent payroll deduction. Workers would have to opt out of the plan if they did not wish to participate and employers would not be required to contribute but could do so voluntarily.

Similar legislation had died in committee in each of the last two years.

Business groups have opposed such efforts saying it would create onerous financial and or administrative burdens.

In February, the Task Force to Ensure Retirement Security for All Marylanders issued a report calling for the creation of a mandatory retirement program.

The task force, appointed in 2014 by then-Gov. Martin J. O’Malley and led by former Lt. Gov. Kathleen Kennedy Townsend, found that about 1 million Marylanders do not have adequate retirement savings.

The report noted that  a “tragic, but fortunately small, portion of Marylanders” does not save for retirement because they “are living hand-to-mouth and simply cannot afford to save.” The report adds that others can save more and “decide to defer some expenses today in order to have a better life tomorrow.”

The primary reason for the lack of retirement savings, according to the task force findings,  “seems to be that — despite many retirement savings options — it’s a lot easier for people to spend money than to save it.”

The recommendations were not surprisingly similar in many ways to the Rosapepe bill. One key difference is that the task force report called for a defined benefit plan similar to that of the state employees pension system. That defined benefit plan was favored by Kennedy Townsend, who will also serve on the new commission.

O’Malley’s task force ended it’s work earlier this year when newly elected Republican Gov. Larry Hogan, a critic of mandatory state-run programs, refused to exercise an option to extend the group for another year.

Doug Mayer, a Hogan spokesman, said the governor remains skeptical of any mandatory, state administered plan and compared it to the under-funded state employers retirement system.

“Governor Hogan is very concerned about Marylanders saving for the future, which is why he fought to protect state employee pensions this past session and passed legislation easing the tax burden on our retirees,” Mayer said.. “However, any measure that adds to our already bloated level of state government bureaucracy or increases the burdens on small businesses and taxpayers will be viewed with a very high level of skepticism. For years lawmakers have failed to properly manage the state employee pension system and it makes zero sense to create another state run system.”