Several states have recently been given the go-ahead to start setting up state-based retirement plans.

Connecticut at the end of April got the OK — after a five-year debate — to offer a state-run retirement program for private-sector workers after the state’s House passed the “Retirement for All” bill. The state’s Senate still needs to approve the legislation.

Maryland passed the state’s auto-IRA bill by a veto-proof majority on April 12, establishing the Maryland Small Business Retirement Savings Program.

Oregon’s plan is in “startup mode” thanks to a recently passed bill in the state authorizing the establishment of the plan, Lisa Massena, executive director of the Oregon Retirement Savings Plan, said on a Wednesday call held by the Georgetown University Center for Retirement Initiatives.

She noted that California and Connecticut have “similar” offerings coming up to Oregon’s, adding that 20 states are “actively working” on state-run retirement programs that support retirement in the workplace. Washington launched a small plan marketplace last year, which has been picked up by New Jersey.

Massena noted that more than 1 million workers in Oregon do not have access to a savings plan at work, with 630,000 working for an employer that does not offer a plan, another 220,000 working for an employer that offers a plan but not to them, and another 200,000 being self-employed.

Oregon’s plan, she said, “will include best practices” like auto-enrollment, auto-escalation and “freedom of choice — there will be an investment menu and a standard investment choice outside of the default” investment option.

She added that investments will be pooled and privately managed in the private sector. “In Oregon that was deemed to be an important feature from a trust standpoint.”  

Messena says Oregon anticipates a “phased launch” of the plan starting in July 2017.

Under the Connecticut bill, employees who are at least 19, make at least $5,000 a year and work for companies that employ five or more workers and don’t offer a retirement plan would automatically be enrolled in the state-run plan (a Roth IRA) at a default contribution rate of 3%, according to the National Association of Plan Advisors, which cites the Connecticut Post.

The bill now heads to the state Senate, where it faces a May 4 adjournment deadline. Says NAPA: “If it is approved by the Senate and signed into law by the governor, a new quasi-public agency called the Connecticut Retirement Security Authority would be created, with a nine-member board to administer the program.”

Maryland’s bill, which applies only to employers with 10 or more full-time employees that use an automated payroll system or service, also creates a state-run auto-IRA program that businesses can use as an option to meet the requirements.

Despite pushback from the Investment Company Institute on its plan, California moved ahead with its “Secure Choice” plan, which would require employers that have elected not to offer their own retirement plans to automatically enroll workers in payroll-deduction IRAs.

ICI told California’s treasurer recently that the state should hold off on the plan until the state fully captured “all of the program’s administrative costs — which will fall either on participants or on California taxpayers.” ICI also said that California’s plan “fails to consider work force demographics and other factors that could reduce the program’s ability to expand retirement plan coverage.”

The California Secure Choice Retirement Savings Investment Board met on March 28 and voted to move forward on the state-run plan.

Complying with a directive from the White House, the Department of Labor released last Nov. 16 a proposed rule and interpretive bulletin to help guide states in developing state-run retirement plans that don’t run afoul of the Employee Retirement Income Security Act.

Industry trade groups like ICI have taken issue with the DOL’s plan to boost workers’ access to retirement plans through state-run programs, arguing that such plans will spur a “confusing, state-by-state patchwork of savings programs” that could lack strict federal controls.

— Check out DOL Releases Proposal, Guidance on State-Run Retirement Plans on ThinkAdvisor.