HB 423, establishing automatic enrollment for newly hired state employees in the 457(b) savings plan, now heads to Governor Meyer’s desk
Dover, DE – The Delaware General Assembly passed legislation on Tuesday, June 30, that will automatically enroll new state employees in Delaware DEFER, aiming to close a persistent gap in retirement security.
HB 423, sponsored by Rep. William Bush in the House and Sen. Trey Paradee in the Senate, establishes automatic enrollment for new state employees in the state’s 457(b) deferred compensation plan – creating a seamless path for those employees to build tax-advantaged retirement savings. The 457(b), 403(b) and 401(a) plans comprise Delaware DEFER, which provides Delawarean public servants with low-cost investment options, financial planning tools, and local plan representatives to help them achieve their retirement goals.
“Bridging the retirement gap has been a top priority for my office, and between our improvements to DEFER and the development of Delaware EARNS, we’ve put thousands of Delawareans in better position to develop long-term financial security,” said Treasurer Colleen Davis. “Automatic enrollment means that saving becomes the default rather than the exception, and that’s the kind of common-sense change that makes a meaningful difference in people’s lives.”
Delaware DEFER recently experienced a record-setting month of May, when an enrollment push in concert with the open enrollment period for employee benefits led to a 45% year-over-year increase in new accounts. The program has also seen significant growth due to HB 130, passed by the 152nd General Assembly in 2023, which opened 457(b) participation to casual/seasonal state employees. Continued growth is expected following the implementation of HB 423, which passed with bipartisan support, including unanimous approval in the Senate.
“Too many people put off saving for retirement because it takes an extra step they never get around to,” said Sen. Trey Paradee. “Automatic enrollment is one of the most effective tools we have for increasing participation in our savings plans, and I’m proud that we built strong bipartisan support to get this across the finish line for our state employees.”
DEFER is overseen by the State of Delaware’s Plans Management Board, which will set the default contribution rate for automatically enrolled employees. That rate can be changed on an individual basis by the employees, who will begin making contributions within 90 days of beginning their employment with the state. New employees can opt out of the plan within 120 days of hiring and have any contributions refunded.
The bill will take effect after it is signed by the governor and the Office of Management and Budget has certified that the necessary payroll upgrades have been made to support it.
About the Office of the State Treasurer
The Office of the State Treasurer serves Delawareans by executing secure transactions, managing tax dollars responsibly, and expanding financial empowerment opportunities across the state’s diverse communities. Since taking office in 2019, Treasurer Colleen Davis has championed innovative policies and solutions to make prosperity and economic opportunity more accessible for every Delawarean. For more information, visit treasurer.delaware.gov.