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Maine gearing up for new retirement plan to bridge savings gap for 200K workers

Roughly 40% of Maine workers don't have access to a retirement savings program through their workplace, meaning they will rely only on Social Security to support themselves when they retire.

But beginning next year, employers with more than five workers that don't currently offer a retirement savings plan of their own will be required to register in the Maine Retirement Savings Program. Their employees will be automatically enrolled in a Roth IRA, said Beth Bordowitz, executive director of the Maine Retirement Investment Trust (MERIT).

"Five percent of their payroll will be deducted and put into this Roth IRA for the employee," she said. "The employee could also choose to change that 5%. They could make that 2% They could make that 10%, so they'll be able to select how much is deducted from their pay[check]."

Workers can choose from a few investment options. They can also decide to opt out entirely. And employers have no financial responsibilities in participating. Maine employers have until Sept. 10 to join a pilot project that will test the new retirement savings program. So far, a restaurant, an inn and a few cannabis stores are among those who opted in to participate early, Bordowitz said.

Maine will then join a handful of other states that have created similar retirement savings programs. They include Colorado, which Maine recently partnered with to administer the new retirement savings program. Bordowitz said the arrangement will allow Maine to set up its program more quickly. It will also bring down the program's administration fees, because Colorado has more participants to offset the operation costs.

The Maine Retirement Savings Program was established through a 2021 law. Another piece of legislation, signed into law by the governor this summer, made changes to the retirement savings program and extended the timeline for employers to register without penalty.