It may soon be easier for Hoosiers to save money under a bill a Senate committee passed Wednesday.
Senate Bill 66 creates a state-assisted savings plan for retirement.
State Sen. Greg Walker, R-Columbus, authored the bill and said it “encourages savings among those in the population today without a savings account offered by an employer.”
Those who sign up for the retirement plan – and have never participated in one before – would receive a $250 incentive in the form of a tax credit. “I believe the credit is a very modest thing to get people to save on their retirement,” Walker said. “We should make an effort to do this.”
SB 66 will now be sent to the Tax and Fiscal Policy Committee where it must pass before continuing to the Senate.
Indiana State Treasurer Richard Mourdock spoke in support of the bill.
“My first reaction was to say no,” Mourdock said. He said he initially did not think the government should get involved in implementing retirement plans.
But then he changed his mind. He said 63 percent of people older than 65 are dependent on Social Security.
The retirement plan is modeled on California’s 401A accounts that allow government bodies to sponsor retirement plans for businesses.
Sen. Phil Boots, R-Crawfordsville, said SB 66 also is based on the 529 plan, which gives parents the opportunity to begin saving money for their children’s college careers.
“It’s essentially a way to get people to save for their retirement because people are not (saving), and they are definitely concerned about not having enough money for retirement,” he said.
Boots said it would take more than $500,000 to begin the program.
And Mourdock said the initial costs are reasonable.
Trenton Hahn, executive director of the Association of Indiana Life Insurance Companies, expressed opposition to the bill. He said the companies he represents already offer plans similar to the one that would be created by bill, and there is ample competition for retirement plans.
Hahn said he would rather see the government “engage in public awareness” for retirement rather than implement a new plan.
Joe Everett, a volunteer for AARP Indiana, said that he was in support of SB 66 because, “Our retirement savings is one of our most important issues for Hoosiers of all ages.”
He said Social Security makes up about 50 percent of the income of Indiana residents 65 years or older, even though it was not designed to be the sole support for a person in their retirement years
“More than 1.4 million working Hoosiers currently do not have access to an employer-sponsored retirement savings plan, such as a 401(K). SB 66 takes a critical step in our effort,” Everett said. “It is a voluntary savings vehicle for those who don’t have access to one through work.”
Everett said AARP will be willing to help bring about awareness should the bill pass.