Md. mandatory retirement proposals come with carrots and sticks

ANNAPOLIS — Members of a legislative task force on mandated retirement plans for businesses in Maryland are considering new proposals that could offer tax incentives or impose financial penalties to prod employers to offer approved plans to workers.

The options under consideration by the Maryland Commission on Retirement Security Savings are the latest attempt by some state legislators to address concerns about the large numbers of Maryland residents who are not adequately saving for retirement. As many as one million Maryland residents do not have adequate retirement savings, according to one review completed for a similar state panel a year ago.

Sen. James C. Rosapepe, D-Prince George’s and Anne Arundel Counties and a member of the commission, said he believes that final recommendations could be adopted within the next six weeks — in time for the General Assembly to consider a bill during the session that starts next Wednesday.

“I think the Department of Labor was very forward-leaning, indicating that they’re going to work with all the states to help us protect the million Marylanders who don’t have a retirement plan at work,” said Rosapepe, who has sponsored similar legislation in the last two sessions.

Other unsuccessful legislative measures stretch back over the last decade.

“The work group has to decide what they want to do,” Rosapepe said. “I’m very optimistic that the work group is going to come up with something that I can support.”

But other lawmakers expressed concerns about rushing to create a mandate on employers based on proposed federal regulations that are likely to be challenged in court.

“Why would we go ahead and do anything until we know which way it’s going to go?” asked Sen. Andrew A. Serafini, R-Washington County and a member of the commission. “It’s going to be settled in the courts. This is the Department of Labor. This isn’t the IRS or the Congress saying this. This here, there are too many questions. (The Department of Labor) didn’t come here with any solutions. It might work, it might not work.”

Members of the work group Tuesday were handed a one-page document containing two sets of potential proposals for a state-mandated retirement savings law.

In the first set, employers of an as yet undetermined number of workers that do not offer a retirement plan compliant with federal Employee Retirement Income Security Act or payroll-deducted IRA account would be required to enroll those workers in a state-administered IRA. The employee could opt out. The law would impose a financial penalty on employers who do not comply with the law.

A variant on that plan calls for the state to create and administer a voluntary multi-employer pool that is compliant with the federal retirement laws.

Sen. Douglas J.J. Peters, D-Prince George’s County and co-chair of the commission, said the first two options are “viable now.”

The group is also considering a second set of options.

Under those proposals, the state would offer a tax incentive to businesses of any size that do not offer a federally regulated plan or payroll-deducted IRA account if those employers enroll their workers in a state-administered IRA plan. Employees would be able to opt out of the program.

A variation on that plan would offer the same incentives if the employer participated in a state-administered plan subject to the federal retirement act.

Peters said that the second two under consideration “would require public comment and some clarification” by the U.S. Department of Labor.

In November, U.S. Department of Labor Sec. Thomas E. Perez, another strong proponent of the retirement security effort and a potential Democratic gubernatorial candidate in 2018, released proposed regulations to eliminate the potential barriers within the federal Employee Retirement Income Security Act.

Federal regulators will accept public comment on the proposed rules until Jan. 19. Members of the panel said they hope to make some recommendations to the labor department but it is not clear yet whether members of the commission will do that individually of if the panel will present a package as a group.

The department also issued a bulletin to states attempting to interpret the federal regulations in an attempt to encourage more states to adopt such plans.