The new program is among a myriad of employment law changes that affect employers as the new year gets under way. The program was expected to launch Jan. 1 but was delayed because the portal for signups was not ready until Wednesday.
State Treasurer Dave Young led a discussion of the program this morning as he opened the portal.
The program was created by state law but is operated by the Colorado SecureSavings Board in the treasurer's office. It requires all employers of five or more workers to provide access to the program or opt out if another privately operated retirement program is available to their workers.
Colorado SecureSavings offers workers access to a Roth Individual Retirement Account that is managed by Vestwell State Savings LLC, which does business as Sumday Administration. Sumday and the Bank of New York Mellon have responsibility for day-to-day operations, according to the program's website. Investment options including the companies in which the fund invests are determined by the program board.
Young said the program was designed "as a critical step to help people develop long-term financial well being." He said that about 40% of the state's workers have no workplace access to a retirement plan; 40% represents about 940,000 workers.
The program "offers a competitive benefit at no cost to employers." Also, self-employed workers including gig workers can access the plan.
About 25 companies around Colorado were permitted to be part of a pilot program to work out the kinks in the plan. Restaurant owner Chris Strowmatt of Blue Bonnet Restaurant, a Tex-Mex establishment in downtown Denver, participated in the pilot.
"We checked other options before, and it would have cost us thousands to enroll and administer a program," she said. SecureSavings enabled her workers to get access to a retirement program, and about 15 signed up to participate.
The same was true for Lee Wood, owner of Wood's High Mountain Distillery in Salida. Wood has eight workers. "We've been wanting to offer a retirement program for a long time, but it hasn't been within reach. The pilot fit exactly what we wanted to offer."
He said the administrative part for the company has been easy. "We've had employees who have upped their withholding. It's been a great program."
State Sen. Kerry Donovan, D-Vail, said the program will be "life changing" for many. "We know that many people have less than a year's worth of resources available to them. This will be an opportunity to set people on a different course that will benefit them in years to come."
Companies register for the plan in the program's portal. It takes about 15 minutes, program managers said. Companies enter their tax ID number and a secure code that is being mailed or emailed to companies. Young said enrollments will occur during the first half of this year.
Employee rosters are uploaded. A percentage of the employee wage is diverted to the savings plan, and the employee has the option to lower or increase the amount.
Once the information is uploaded, a 30-day waiting period will begin before deductions are taken from paychecks.
"The goal is savings. We want to make sure we have savers in the state of Colorado," Young said. Without the program, the state would be "on the hook" for about $18 billion in services to people without retirement income, the treasurer said, thus averting a tax bill for taxpayers.