A Nevada bill creating a state-run retirement savings program for private-sector workers quietly passed into law June 16.
The legislation, which was passed by the Assembly on June 3 following passage in the Senate on May 29, became law without the signature of Nevada Gov. Joe Lombardo, who failed to veto it by the June 16 deadline.
The legislation will require employers without workplace retirement plans to enroll their workers in the Nevada Employee Savings Trust Program or in a similar program offered by a trade association or a chamber of commerce. Employers with more than five workers and in business for at least 36 months will be required to make the program or a similar program available to their workforce.
The Nevada Employee Savings Trust program is structured as an auto-IRA, meaning employees will be automatically enrolled in a payroll-deduction individual retirement account. Employees enrolled in the program will be able to withdraw contributions to meet financial emergencies and will also be able to opt out of the program if they choose.
The legislation creates a board of trustees for the Nevada Employee Savings Trust, which will oversee the design, implementation and administration of the state-run retirement savings program.
Under the legislation, the board of trustees will be required to establish the program so employees can start contributing to the program beginning July 1, 2025. The board will determine the types of IRAs offered as well as the default contribution and auto-escalation rates and will develop an option for participants to convert contributions into fixed lifetime income streams.
Nevada joins 13 other states that have established — or enacted legislation to establish — similar auto-IRA programs. The three largest programs — CalSavers in California, Illinois Secure Choice and OregonSaves — have accumulated more than $816 million in assets as of April 30, according to information on their websites.
Such programs can make a big difference for financially vulnerable people without sufficient retirement savings, according to the Pew Charitable Trusts, which commissioned a report assessing the impact of insufficient savings on state and federal budgets.
The report found that insufficient retirement savings could cost state and federal governments $1.3 trillion over the next 20 years to fund public assistance programs for financially vulnerable retiree households. The impact of insufficient savings was projected to cost Nevada $1.8 billion while devouring $8.8 billion from the federal budget.