Colorado's Secure Savings Program and its New Mexico counterpart are teaming up to reduce costs and provide portability for people who move from one state to the other.
The two states signed a first-in-the-nation partnership agreement, Colorado Treasurer Dave Young announced Tuesday.
"With this historic partnership, Colorado and New Mexico are working to ensure that a dignified and sustainable retirement isn't only a dream for the privileged few," Young said in a news release. "This is one step in the right direction for a truly portable retirement benefit - one that carries across state lines."
The two IRAs offer retirement savings plans for private sector workers who do not have access to workplace retirement savings plans. Retirement officials expect to roll out the program in October next year.
Young's office said the partnership will offer an accessible retirement savings option to almost one million Coloradans and nearly 430,000 New Mexicans. In Colorado, more than than 40% of the state’s workforce could take advantage of the program. New Mexico's program is called Work and Save.
A 2019 law, Senate Bill 20-200, created Colorado's Secure Savings Program, the state-facilitated automatic enrollment IRA plan, following the recommendation of a state secure savings board. The law seeks to partially address the gap for 40% of privately-employed individuals who do not have retirement savings.
The program is mandatory. Employees are automatically enrolled, although they can opt out. The program is also available to self-employed individuals and contractors.
The state general fund, which is primarily made up of corporate and individual income taxes, is picking up the program's implementation costs over two years at a total cost of $1.1 million.
Colorado's program is still in the design phase.
Hunter Railey, the Secure Savings director, said a pilot is expected to begin in October 2022, with full enrollment occurring in early 2023.
“This partnership allows us to get more value out of the program we are already working to establish, and will benefit participants in the future by allowing us to reduce fees sooner, once the program’s implementation begins in October 2022. The partnership is open to working with other states, as well,” Railey said in the same news release Young's office issued.
Noting the successes of single-state Auto IRA savings programs in California, Illinois, and Oregon, Young said the Colorado and New Mexico partnership represents the "next step in extending low-cost, portable retirement savings options to private sector businesses and their workers."
The agreement between Colorado and New Mexico will focus on collaboration for program administration and financial services, marketing and outreach, program evaluation and research, data collection and participant privacy, Young's office said.