LANSING – State Representatives Richard Hammel (D-Mt. Morris Township), Brenda Clack (D-Flint), Lee Gonzales (D-Flint Township) and Ted Hammon (D-Burton) today announced a plan to offer 401(k)-style retirement plans to employees in small businesses, opening the door to a secure retirement for millions of Michigan workers.
"This proposal will help every Michigan worker save now for a stronger, more secure tomorrow," Hammel said. "Everyone who works in Michigan deserves to enjoy a good quality of life when they retire. Michigan is sending the message that no worker will be left behind in their golden years."
Under the plan, the state will work with a private retirement investment planner to set up a 401(k)-style retirement plan and open it to all businesses, including those with as few as one employee. The company will manage the retirement plan, much like the state's own 401(k) plan. Businesses could choose to match employee contributions.
"The men and women who work in small businesses help drive Michigan's economy, and they deserve a fair wage, health care and a secure retirement," Clack said. "Expanding 401(k)-style plans is good for our families and good for our seniors."
Currently, four in 10 workers say they aren't saving for retirement and 90 percent of Americans say they have financial concerns about their retirement. While a comfortable retirement requires 70 percent of pre-retirement income, Social Security provides only 40 percent of that income, according to the 2006 state's Michigan Retirement report.
"We know that workers whose employers offer a 401(k) plan are twice as likely to save as workers who don't have that option," Gonzales said. "Enabling employers to offer a 401(k) plan will likely double the number of residents who are saving for retirement."
The Office of Retirement Services estimates that about 2 million people will participate in the Democrats' plan. The only cost to the State is the estimated start-up cost of $559,000, which it expects to recoup in five years. The House Democrats' proposal is set to get a hearing in committee this week.
"Strengthening small businesses in this way will make Michigan a more attractive place to set up shop," Hammon said. "Small businesses will be able to attract talented workers to Michigan and create good-paying jobs. This plan is crucial to getting Michigan back on track."