RISavers program gives private sector workers a hand in building their nest eggs • Rhode Island Current

Former U.S. Naval officer Darryl Lindie learned early in his career that taking care of his team was key to accomplishing a mission.

Since buying AASign & Awning in Warwick in 2023, Lindie has applied that philosophy to his business, giving his 30-person team paid days off and other benefits. But one offering remained a little too complicated and expensive: retirement savings.

Not for long.

Legislation approved in the 2024 General Assembly and signed into law by Gov. Dan McKee in September sets up a public retirement savings program for private-sector workers whose employers don’t already offer the investment option. Ahead of its formal launch, state officials unveiled details of the RISavers program at an event outside Lindie’s sign shop on Wednesday.

Modeled after similar programs in other states, including Connecticut, RISavers automatically opens Roth Individual Retirement Accounts for eligible private-sector workers, set up through the Rhode Island Office of the General Treasurer with help from a third-party account administrator.

“It is absolutely true that anyone can open a Roth IRA or another retirement account whenever they want,” Treasurer James Diossa said. “But it’s also equally true that not everyone has the ability to navigate the financial sector. These things can be daunting and RISavers makes it quick and easy and helps ensure more Rhode Islanders are on a path to stable retirement.”

An estimated 170,000 Rhode Island workers, equal to 40% of the state’s private-sector workforce, don’t get retirement benefits through their jobs, according to information from Diossa’s office. 

The program also alleviates the burden on small businesses, which have no obligation to match contributions. Their only cost is from processing payroll deductions from participating employees.

Businesses with at least five employees are mandated to make the new retirement program available to their workers, with phased-in deadlines based upon business size. Employers with at least 100 workers must enroll within the first year of the program, while those with 50 to 100 workers have to sign up within two years. All 400,000 businesses that meet the minimum employment requirement must join within three years. Businesses with fewer than five employees can also sign up anytime they want.

“This represents a win for families, for the state economy, and for the overall well-being of our state,” McKee said.

And, it doesn’t come with any extra costs to taxpayers or extra staffing needs, as touted by House Speaker K. Joseph Shekarchi.

A fiscal note included with the legislation in March 2024 estimated a $311,000 startup cost, split between fiscal 2025 and fiscal 2026, based on comparable startup costs in other states like Delaware and Maine. However, no additional money was used in the nearly $14 billion fiscal 2025 budget to pay for the program, which instead relied on existing funds within the treasurer’s office, according to Rob Craven, Diossa’s legislative affairs director. 

Rhode Island will pay a $100,000 fee for Vestwell State Savings, split between this fiscal year and the next, to administer the program. Rhode Island is also partnering with Connecticut, which launched its public retirement savings program for public-sector employees two years ago, to share in administration costs and investment fees from Vestwell.

Which, in turn, drives down the fees for participating workers.

The program will use Bank of New York Mellon for its accounts, the same financial services company Vestwell uses for its version of a public retirement account.

Since Connecticut launched the MyCTSavings program in April 2022, it has opened retirement accounts for nearly 30,000 state residents, who have invested $33 million, said Comptroller Sean Scanlon, who attended the event in Warwick.

As of June 30, 2024, 20 states had launched, or passed legislation to launch, retirement savings programs for private sector workers, 17 of which (including Rhode Island) automatically enroll eligible workers, according to the Center for Retirement Initiatives at Georgetown University’ McCourt School of Public Policy.

Diossa plans to launch a pilot program with a small number of participants in the spring of 2025, opening up the program to full capacity “shortly after.”

Lindie is eager to sign up, noting the interest among his workers already. He hopes the perk will attract new workers to the growing, design-to-build sign shop.

“We are looking for a younger generation of talent, and we need these kinds of benefits,” Lindie said.