Bills would reinstate employer match and allow casual/seasonal employees to participate in retirement plan

Remaining consistent with her three main priorities; bolstering retirement security and readiness, creating pathways to economic empowerment, and promoting a culture of financial excellence, Treasurer Davis has proposed two pieces of legislation with bi-partisan support designed to support state employees with their retirement saving.

The first bill, supported as a key strategic objective of the Delaware Plans Management Board, would reinstate the employer match for state employee contributions to the deferred compensation program. The State suspended the match in July 2008 during the early part of the ‘Great Recession’.

“It was always the intent of the General Assembly to revive the match after lawmakers reluctantly put it on hold in order to cut costs,” said Treasurer Davis. “In fact, every budget bill since Fiscal Year 2008 contained language reading ‘It is the intent of the General Assembly that this program be reinstated when funding becomes available.’”

Senate Bill 94, sponsored by Sen. Trey Paradee and House Majority Leader Valerie Longhurst restores the State’s match and adjusts it for cost-of-living increases by setting the maximum match at $20 per pay period. The previous maximum was set at $10 in the year 2000.

“For over a decade, the State of Delaware provided a meager match to the deferred compensation program as a way to encourage state workers to save for their future,” said Sen. Trey Paradee, D-Dover, Senate prime sponsor of SB 94. “Now, after six straight years of surpluses, I think it’s time we finally keep our promise and restore a match that keeps pace with inflation. This legislation is not only good for state workers, it also will help the State of Delaware at a time when it’s getting harder to compete with the private sector.”

During the time that the State offered the employer match, the employee participation rate was growing at an average of 3.25% per year. After the suspension, employee participation declined at an average rate of 1.6% per year.

Senate Bill 94 also provides retirement help to State employees with student loan debt who are struggling to save for retirement. The bill also authorizes the State to contribute to an employee’s retirement account if the employee is making payments on student loans, and as a result, the employee cannot afford to contribute to their retirement account.

A second piece of legislation will take another step towards increasing retirement saving opportunities for state employees. When passed, House Bill 130, sponsored by Reps. Longhurst, Krista Griffith, and Melissa Minor-Brown and Sen. Paradee will allow casual seasonal state employees to participate in the State’s 457(b) retirement savings plan. Currently, casual/seasonal employees, who are not eligible for benefits, are excluded from the plan. As a result, many casual seasonals are missing out on saving for retirement.

“Casual seasonal employees make up a critical part of the state government workforce, and they play a significant role in keeping our state running and delivering services to the people of Delaware.” said Treasurer Davis. “Among those in casual seasonal roles are nurses, park rangers, prosecutors, accountants, security officers, and social workers. The State should be taking care of these hard-working individuals by allowing them to participate in the State’s retirement savings plan so that they can save, invest, and build wealth for a more secure and comfortable retirement.”

“Our hardworking state employees dedicate their lives to serving our communities. It’s only fair that we give these civil servants the tools and resources they need to enter their retirement years with dignity and security. With these bills, we’re taking meaningful steps to fulfill that promise and secure the financial future of our state’s workforce,” said House Majority Leader Valerie Longhurst. “I commend State Treasurer Colleen Davis for her commitment to ensuring that all state workers have the opportunity to plan for their retirement with confidence and I look forward to passing these bills in the General Assembly.”

State Treasurer Colleen Davis led the first in a series of public forums to spread the word about the benefits of Delaware EARNS, an upcoming program that will provide workers and employers with access to low-cost retirement savings plans, beginning in January 2025. The Delaware NAACP, the Metropolitan Wilmington Urban League, and the Police Athletic League of Wilmington joined with the Office of the State Treasurer in the event Tuesday evening at the Wilmington PAL Center.

“Taking the EARNS message to communities with many small businesses and residents who work for these businesses will help us share the value of the program,” said Treasurer Davis. “Explaining to entrepreneurs that they can open the door for their employees’ retirement savings with no cost and minimal effort can help it become a valuable tool in hiring and retaining quality workers that help keep small businesses running.”

The presentation included information on how the pending retirement crisis created the need for Delaware EARNS. Currently 39% of the State’s workforce does not have an easy way to save through a retirement program at work. Delaware EARNS addresses the situation by automatically enrolling employees into a State-facilitated retirement savings plan unless they elect to opt-out. Delaware EARNS also benefits small businesses who may not be able to offer retirement plans to employees due to the cost and administrative burden, allowing them to attract and keep good employees by offering a crucial benefit like retirement savings.

The next forum takes place May 4, 2023, at 6:00 p.m., at the Living Grace Worship Cathedral in Middletown in conjunction with the Alpha Kappa Alpha Sorority, Inc. A third will take place in June co-sponsored by AARP Delaware.

Meanwhile, the Delaware EARNS Program Board continues to meet and establish policies and procedures for the program. The Board will meet tomorrow, April 13, 2023, and again on July 13, 2023, and October 12, 2023. The Board’s three standing committees, the Program & Investment Committee, Audit, Policy & Governance Committee, and the Outreach & Engagement Committee all continue to meet and work towards implementation of the program.

To learn more about Delaware EARNS, visit de.gov/earns. For more information about the work of the Board, visit https://treasurer.delaware.gov/earns_board/.

More to come in 2023

Delawareans continue to move closer to financial security in retirement thanks to ongoing development of the Delaware Expanding Access for Retirement and Necessary Savings (EARNS) Program, designed to provide workers and employers access to low-cost retirement savings plans.

Less than two months after being seated, members of the Delaware EARNS Program Board have already made significant strides towards how the program will run when implemented in 2025. Responsible for overseeing the initial design and implementation of the program, the board was composed with an emphasis on diversity and female leadership. Governor Carney appointed two members of the board, Fayetta Blake who serves as chair, has an extensive background in community banking and financial services.

“I am grateful for the opportunity to lead this group of people working toward making sure everyone has the prospect to save money and retire with dignity,” Blake said. “I am humbled by Governor Carney’s trust in me and excited to move forward.”

The other public member of the board is Robert Herrera, an entrepreneur with several businesses throughout Delaware and Maryland. Remaining members of the Delaware EARNS Program Board are State Treasurer Colleen Davis, Secretary of Finance Rick Geisenberger, Christina Haas from the Office of the State Insurance Commissioner, Ethel Belfon from the Department of Labor, and Donna Vieira who serves as the Chair of the Plans Management Board.

“Before passage of the EARNS Act, more than half of Delaware workers lacked an easy way to save for retirement, but that’s coming to an end,” said Treasurer Colleen Davis who championed the creation of EARNS. “With the EARNS Program Board in place and beginning its work, a more financially secure future for everyone in Delaware’s workforce is on the horizon.”

The board met in November at which time Program Directors from Colorado and Oregon shared insight on the development of Auto IRA programs in their states. Additionally, Ms. Blake also appointed chairs of the board’s newly established committees:

• Program & Investment Committee – State Treasurer Colleen Davis
• Audit, Policy & Governance Committee – State Finance Secretary Rick Geisenberger
• Outreach & Engagement Committee – Rob Herrera

The chairs will work with OST over the next several months to design the governance framework of their committees and to recruit committee members.

“I am excited to bring additional people into the fold by filling our committees with those that can not only effect change in retirement savings as Delaware EARNS moves towards implementation, but also those who will be affected and helped by the program,” Blake said.

Another step towards that implementation took place December 5, 2022, when the RFP for Program Consulting Services went live. The consultant selected will advise the EARNS Program Board and OST in areas such as program structure and design, implementation, administration, procurement, standards, and compliance.

The board will also hire an Executive Director for Delaware EARNS. That person will help launch, manage, and direct the EARNS program. Through closely working with the Board, the Executive Director will also partner with the Outreach & Engagement Committee to develop a comprehensive outreach and engagement strategy and conduct presentations to large, diverse audiences including the General Assembly, business advocacy groups, employers, and the general public.

As work continues into the new year, objectives for 2023 include hiring additional personnel to support the Executive Director and the board on issues including budget approvals around marketing, promotion, and outreach, as well as hiring legal support to assist with the program. The board will also investigate the possibility of forming an Interstate Partnership, a working alliance with other states that have similar programs in order to maximize results of efforts. Finally, the board plans to hold town hall meetings and listening sessions, along with the AARP of Delaware which has supported and advocated for Delaware EARNS from the start.

Signed into law by Governor Carney in August, Delaware EARNS provides a convenient way for all workers to save for retirement, particularly middle and low-income workers who lack access to employer-sponsored plans and small businesses unable to provide such a benefit.

In order to help keep the public informed of the board’s activity in a timely and transparent manner, the Office of the State Treasurer (OST) established a website  and established an email address for people to use for questions. Additionally, anyone interested can also register to receive updates on developments about DE EARNS.

“We began exploring the idea of bringing a secure choice retirement program like EARNS to Delaware way back in 2019,” said Treasurer Davis. “Thanks to the AARP and other community partners, EARNS will soon be a valuable asset in addressing my three main priorities: bolstering retirement security and readiness, creating pathways to economic empowerment, and promoting a culture of financial excellence.”

Chaired by local entrepreneur and community leader, board scheduled to meet

As directed by the Delaware EARNS Act created by the signing of House Bill 205, members have been appointed to the Delaware EARNS Program Board.

Board members are:

• Fayetta Blake – Chair
• Colleen Davis – State Treasurer
• Rick Geisenberger – Secretary of Finance
• Christina Haas – Office of the State Insurance Commissioner
• Ethel Belfon – Department of Labor
• Donna Vieira – Chair of the Plans Management Board
• Robert Herrera – Member at Large

Delaware EARNS (Expanding Access for Retirement and Necessary Savings), a State-facilitated, universally available retirement savings plan, providing a convenient way for all workers to save for retirement, requires businesses with more than five employees that don’t currently offer a retirement plan to participate through a simple payroll process.

“I am honored to have been chosen by Governor Carney to chair the Delaware EARNS Program Board,” said Fayetta Blake, the founder and Executive Director of Pathways to Success, Inc., and an entrepreneur with an extensive background in community banking and financial services. “I am excited to work with such committed people on a project that will help secure financial security for Delawareans who currently have no effective way to save.”

The Delaware EARNS Program Board will oversee the initial design and implementation of all administrative aspects of the Delaware EARNS program including, marketing and promotional responsibility, vendor management, and investment oversight.

The inaugural meeting is scheduled for Tuesday October 4, 2022. Details of the meeting including the agenda and how to join virtually or in person can be found on the Delaware Public Meeting Calendar.

“The composition of the Delaware EARNS Program Board could not be stronger given the critical need for the work to be done,” said Treasurer Colleen Davis. “This landmark program could serve up to 150,000 Delawareans, while addressing all three of my top priorities; bolstering retirement security and readiness, creating pathways to economic empowerment, and promoting a culture of financial excellence.”

Signing of HB 205 by Governor Carney allows for next steps

Almost 150,000 Delaware workers got a step closer to secure retirement savings when Governor Carney signed HB 205, the Delaware EARNS Act, into law this morning. With the enactment of the legislation, the Office of the State Treasurer (OST) officially begins building the infrastructure that will drive the landmark retirement program.

Delaware EARNS (Expanding Access for Retirement and Necessary Savings) requires businesses with more than five employees that don’t currently offer a retirement plan to participate through a simple payroll process.

“We’ve worked long and hard to make this program a reality for Delawareans who lack access to an employer-sponsored retirement program,” said State Treasurer Colleen Davis. “I am grateful to Representative Larry Lambert, Senator Nicole Poore, all of their colleagues in the General Assembly, the AARP of Delaware, and of course the Governor for helping us get here.”

OST will hire an executive director who will guide the operation of the program and work with the Delaware EARNS Program Board, established by the legislation to oversee initial design and implementation of the program. The Board will consist of the State Treasurer, Secretary of Finance, Insurance Commissioner, Secretary of Labor, and chairperson of the Plans Management Board, each of whom may appoint a designee, as well as two members of the public chosen by the Governor.

“It shouldn’t matter what your background or job is: every Delawarean deserves the opportunity to enter into retirement with economic dignity and security,” said Rep. Lambert, D-Claymont, prime sponsor of the legislation. “For small businesses and the almost 150,000 Delaware workers lacking an employer-sponsored saving program, the Delaware EARNS program will be financially transformative, allowing residents to save for the future while filling a critical need in the marketplace. This new program will put thousands of working Delawareans on a level playing field when it comes to their financial future, and I am excited to see it in action.”

“While every Delaware worker deserves to enjoy their golden years, nearly one in five of our neighbors currently won’t be able to achieve the dream of a financially secure retirement, simply because their employer does not offer a retirement savings plan like a 401(k),” said Sen. Nicole Poore, D-New Castle, the Senate prime sponsor of HB 205. “I want to thank Rep Lambert and Treasurer Davis for recognizing that we can do better for Delaware’s working families. The Delaware EARNS Act signed into law today is a win for thousands of workers who will be able to sleep tonight with the peace of mind that comes from knowing they are on a stable path to a more financially secure future. It’s a win for the hundreds of small businesses that will be on a more even playing field with the major corporations that can afford to provide these competitive benefits, and it’s a win for Delaware’s middle class by bringing a financially secure retirement within reach for nearly 150,000 of our neighbors.”

AARP Delaware, its staff, and its more than 187,000 members advocated for the creation and passage of Delaware EARNS.

“The pandemic has shown how vital it is for Americans to have savings to depend on. We must make it easier for workers to save so they can take control of their future,” said AARP Delaware State Director Lucretia Young. “AARP was pleased to work alongside our State Treasurer to help provide an easy pathway for workers to start building a safety net and grow the savings they need for a more secure future.”

More information about Delaware EARNS can be found at de.gov/earns.