ARA Opposes MA’s Voluntary MEP Expansion, Wants Mandatory Auto IRA Instead

The American Retirement Association (ARA) and its affiliates sent a letter to the Massachusetts legislature opposing its House Bill No. 3031 and Senate Bill No. 2025, legislation that makes available the Massachusetts Defined Contribution CORE Plan to nonprofit organizations of any size in the Commonwealth of Massachusetts.

The reason for its opposition is the poor adoption and utilization rates seen with voluntary state multiple employer plans (MEPs). The ARA noted that after six years of operation, and 11 years since the measure creating the option was signed into law, only 5% of the eligible nonprofit entities have taken advantage of the Bay State program. The letter adds myRA, the voluntary federal program implemented by the Obama Administration, and the voluntary Washington State Small Business Retirement Plan Marketplace as further failures in the space.

According to the letter, a better solution is a mandatory auto-IRA program, which has found success in the 14 states that now offer them, including Connecticut, Maine, New York, and Vermont.

“In fact, Vermont just this year switched from a voluntary open MEP program to a mandatory auto-IRA program,” the letter stated. “The ARA believes that the best approach to address the existing coverage gap in Massachusetts would be to join these 14 other states and enact and implement House Bill 998 and Senate Bill 624, the Massachusetts Secure Choice Savings Program Acts.”

The legislation would establish a mandatory retirement plan coverage requirement for all employers with five or more employees in the Commonwealth, including nonprofit employers.

It also establishes a state-facilitated auto-IRA program as an option for employers to use to meet the retirement plan coverage requirement. 

“The new retirement plan coverage requirement would complement the existing CORE Plan and the private sector retirement plan market and render House Bill No 3031 and Senate Bill No. 2025 unnecessary,” the letter concluded. “The Commonwealth would be best served if the legislature advanced a new mandatory auto-IRA program and kept the CORE Plan as is, with an increased focus to encourage more small nonprofit organizations to join the CORE Plan when the coverage requirement is put in place.”

ARA CEO Brian Graff has previously called state-based mandatory auto IRAs “the perfect private/public partnership to help close the retirement plan coverage gap."