It may not be the most pressing concern facing Gov.-elect Larry Hogan, but it was disappointing to learn that he is pulling the plug on the state task force pondering how to get middle-class Marylanders to save more for retirement. Whether the incoming governor likes it or not, the loss of defined-benefit pension plans in the private sector and the failure of workers to invest sufficiently in alternative defined-contribution savings plans — if they are even made available by their employers — is a serious concern.
What makes Mr. Hogan's decision notable is that the 14-member task force created by Gov. Martin O'Malley less than one year ago only began what was supposed to be a two-year study this past summer. It has met only three times and has yet to issue any findings. In other words, it was just getting warmed up but will expire in mid-February under terms of the executive order unless renewed by Mr. Hogan, which he says he won't do.
It's not hard to guess why. One of the key proposals being explored by the group and its chair, former Lt. Gov. Kathleen Kennedy Townsend, is requiring businesses to offer a retirement savings plan or, as an alternative, enroll employees in a state-managed savings plan. There has also been discussion of making such a program an "opt out" for employees, meaning that workers would automatically be enrolled in the retirement savings plan through a deduction in their paychecks unless they took steps to remove themselves from participation.
That mirrors policy discussions that have been going on across the country in recent years as governments ponder the impact of the loss of pension plans in the private sector. As a growing number of people reach their retirement years without sufficient financial resources, the strain on government to provide such basic benefits as housing, food or health care is likely to grow. Only about half of private sector workers currently participate in a retirement plan of any kind, according to the U.S. Bureau of Labor Statistics. Tens of millions of Americans are expected to outlive whatever savings they have accumulated.
But some in the business community bristle at the notion that government might mandate a retirement benefit (even if it carries no fiduciary obligation to the employer), and Mr. Hogan, who spoke often during the campaign for governor about the need to lift government mandates, may be especially sensitive to that criticism. Meanwhile, refusing to maintain the task force doesn't come with much political cost to someone who never signed the executive order creating it in the first place.
Still, that doesn't make the problem go away. Employees of all ages can be educated about the need to save more for retirement, but that's of limited help if their employers don't have any kind of retirement plan — as more than one-third nationwide currently do not. And retiring the retirement task force won't keep lawmakers from taking up the issue. They'll just have to do it without benefit of the extensive fact-finding and hearings by a task force that's expected to issue a report in February anyway.
We're not certain that mandates are necessarily the best way for the state to proceed, but we can't object to a conversation about them. Two years ago, California began moving in this direction, and states from Arizona to Connecticut are similarly exploring ways to provide state-based retirement plans for the benefit of private sector workers. It's difficult to see the harm in better understanding the nature of the problem and the potential remedies.
Perhaps Mr. Hogan would be interested in setting up his own task force on the retirement savings shortfall (one not chaired by a high-profile member of an iconic Democratic family), but somehow we doubt it. The incoming governor made a lot of promises about reducing taxes on those who have retirement income, but the topic of those who don't never made it into his stump speech.