- The state estimates that around 700,000 to 900,000 workers in Utah lack employer-sponsored retirement plans.
- A new bill aims to provide a framework for small businesses to offer retirement options.
- Utah lawmakers favor this approach instead of the mandatory systems seen in other states.
According to state estimates, a significant number of people in Utah aren’t saving for retirement. One major reason seems to be that many employees at small businesses don’t have access to employer-sponsored retirement options.
This situation certainly adds pressure on individuals and poses a challenge for the state as well. With more Utahns depending solely on Social Security, concerns about future financial stability are rising.
Representative Joe Ellison (R-Tokelville) pointed out that it’s not just a Utah issue; this retirement gap is a national concern.
“The reality is, we’re heading towards a situation where Social Security might not be viable. We’ve all heard that before, but many Americans, and certainly many Utahns, aren’t saving enough for their future,” Ellison remarked.
To combat this issue, representatives are putting forth a bill, HB250, designed to help small business owners enable their employees to save for retirement. Official figures suggest that roughly 700,000 to 900,000 workers in the state lack access to these plans, as shared by the state Department of Finance.
What is the problem?
Suzanne Millard, who runs Ignite and lives in Utah, expressed that small businesses often struggle with retirement planning due to fewer resources than larger companies.
She appreciates the bill for its potential to allow “small business employees to establish retirement funds, enabling them to stay with these businesses and eventually retire.”
Rep. Jason Thompson, R-River Heights, who owns several businesses, admitted he faces challenges in setting up retirement plans too. He identified various hurdles for small businesses, such as high costs, complexity, and insufficient governmental support.
Moreover, many private retirement plan providers overlook small businesses, as these companies fail to offer the same market incentives that larger corporations do.
Nationwide, 47% of private sector workers over 18 lack access to employer-sponsored retirement plans, and in Utah, that figure increases to 51%, according to the research.
Thompson noted that the lack of retirement savings could eventually burden the state with additional costs as more individuals become reliant on public funds in retirement. A Pew study estimates Utah’s retirement savings gap could lead to over $1 billion in increased state expenditures by 2040 without intervention.
Lawmakers aim to ensure that workers across various sectors—be it restaurant, construction, or other small businesses—can access similar retirement savings opportunities as those in Fortune 500 companies.
What’s the plan?
Ellison and Thompson collaborated with Utah State Treasurer Marlo Oakes to devise a voluntary approach to bridge this gap.
The proposed HB250 aims to establish the Utah Retirement Plan Exchange, a state-managed marketplace where private retirement plans can be offered to employers in a straightforward manner.
“We believe it could set a standard for other similarly aligned states,” Thompson remarked.
“This framework would apply to every state, not just ours,” Ellison added, highlighting that many state solutions involve mandates, which Utah finds unappealing.
The bill is expected to provide small businesses with access to corporate-sponsored plans and simplified auto IRA options.
This would let employees start making payroll deductions into retirement savings, helping them build wealth over time.
Participation in this exchange is entirely optional for businesses.
The initiative aims to resolve the market failures where small businesses currently lack viable retirement options. Oakes emphasized that many states have their own requirements for offering retirement plans, and discussions of a potential federal mandate are also underway.
“Imposing mandates isn’t the right strategy for Utah. We want to simplify the process for employers,” Oakes noted.
With more than 90% of businesses in Utah classified as small and 44% of employees working for them, this bill could offer a unified platform for collaboration between businesses and providers. Oakes and his office would oversee the creation of this platform.
“The state doesn’t handle the assets or back the plans; we serve as a bridge to connect private market parties, helping reduce barriers for employers offering retirement savings,” Oakes explained.
How will this help the people of Utah?
Oakes mentioned a new federal assistance program that subsidizes up to half of retirement benefits, capped at $2,000 per individual each year. However, this support can only benefit those who have access to retirement savings.
Millard expressed optimism about the platform helping to close this gap, which could lead to better employee retention for Utah’s small businesses.
“This allows employees to invest in sustaining and growing the business without worrying about retirement in 30 or 40 years,” she pointed out.
Still, Millard has reservations about how businesses will navigate the program and its specifics.
Senator Lincoln Fillmore, R-South Jordan, believes the bill is promising.
He added that it would motivate companies to assist their employees in saving for retirement without imposing any cost to taxpayers.
