Utah retirement plan

Utah has a problem. Too few of the state's citizens are saving enough for retirement. Sen. Todd Weiler, R-Woods Cross has a potential solution.

Weiler is again proposing legislation that aims to create a retirement savings plan for employees who don't have access to a traditional 401(k) or IRA savings instrument through their work.

Though the bill passed the Senate last session it stopped in the House. The idea merits serious consideration from the Utah Legislature.

The so-called Small Employer Retirement Plan hopes to do for retirement savings what Utah's 529 plan does for college savings.

The Utah Educational Savings Plan, or 529 plan, began in 1996 with a mere $154,000 in investments. Today it boasts more than $8 billion in total managed assets, and is consistently ranked among the top plans in the country.

Its model is simple, allowing families to invest for future college expenses exempt from federal and state tax. Although the Utah Educational Savings Plan was commissioned and authorized by the state, its assets are managed by professionals.

Weiler and others are hoping to create a similar plan for retirement in Utah. The stakes, they contend, couldn't be higher.

Some estimate that less than half of all Utah's private-sector employees have the option of a traditional retirement investment instrument through their work. Consequently, many small business employees are simply not saving enough for life after employment. The long-term consequences of this trend may mean added burdens on already-strained social safety nets.

The proposed plan would provide private employees with the option of investing in an IRA, or individual retirement account, through automatic payroll deductions - greatly increasing the chances that employees of small business will save gradually overtime.

The proposal would also help small businesses compete for employees, allowing them to provide workers access to an attractive retirement plan on par with larger, more established firms.

There are of course prominent constituents who object to the legislation, arguing that a state-authorized plan would create unfair competition with companies that already offer retirement plans tailored to small businesses and their employees.

Those concerns should not be dismissed. But Utah must find ways to do more to encourage retirement savings among those who do not have easy access to plans and who may as a result cause greater costs on state safety nets down the road. Sen. Todd Weiler's plan represents a solution well worth considering.

Credit: By Inouropinion For the Deseret News