After Colorado mandated retirement plans, a local chamber built its own
Quick links: Pensions, Roths and IRAs | Colorado Springs’ multi-employer plan | New laws impacting seniors | Unemployment rate unchanged at 4.8% | AG’s case of the imposter T
When Colorado began requiring employers with five or more workers to offer a retirement plan two years ago, the state created its own option. Some companies immediately signed up. But it wasn’t quite a 401(k). It was a savings account. Some companies wanted a retirement plan.
So the Colorado Springs Chamber & EDC introduced its own program this month based on the idea that if multiple employers pool resources, everyone will save on fees and costs, plus have an added benefit to attract more workers. Called a Multiple Employer Aggregation Program, the chamber’s program is facilitated by the local Morgan Stanley subsidiary, Jenson Group Wealth Management through Transamerica.
“This offers an alternative to the Colorado SecureSavings plan,” said Craig Carle, vice president of membership. “This one is a little bit different in the sense that it gives companies the ability to offer a true 401(k) at a discounted rate, so lower fees, while being able to offer (workers) more fund options.”
Unlike the state plan, employers can also provide a 401(k) match to encourage workers to get started by saving a little of their paycheck for the future.
The state’s plan, called SecureSavings, is a Roth IRA, which means workers contribute post-tax income. While there’s no incentive of an annual tax deduction, the benefits kick in at retirement when employees can cash out tax-free. Employees can opt out of the state’s plan and some do because they earn too little to set aside some of their paycheck each month.
State Treasurer Dave Young is a big advocate of the state’s plan but he’s not offended by what the local business community is doing in Colorado Springs.
“Our goal remains the same: to expand retirement savings opportunities to workers who need them most,” Young said in an email. “We are excited to see more business owners providing enhanced benefits, especially programs that offer employer matches.”
A mix of retirement options
According to the latest Congressional Research Service report on retirement accounts, at least half of all U.S. households have some sort of retirement plan. Most have saved up less than $100,000.
Adults 65 years or older had the highest rate of age groups with zero saved up in a retirement plan. However, the analysis pointed out older workers were more likely to have company pensions so they didn’t need a separate individual retirement plan.
But many companies cut pensions — or guaranteed retirement benefits — for workers years ago. According to the U.S. Bureau of Labor Statistics, only 15% of employees at private employers had one as of 2023. And the mix of industries with companies offering pensions was largely relegated to white-collar professions, like those in finance, where 33% of workers have access to a pension. In the leisure and hospitality industry, access is 1%.
That’s why Young supported building SecureSavings, which is open to all employers who don’t offer a plan of their own.
“Entrepreneurs often don’t have the resources to offer a private plan or join one through a chamber of commerce, so it’s vital to provide a streamlined, statewide option that ensures every business can comply with the law,” he said.
In two years, nearly 77,500 workers in Colorado have opened a retirement account under the state’s plan. Nearly 17,000 employers have enrolled. It’s open to companies large and small, the self-employed, gig-economy workers and farm workers.
Peter Kaldes, president and CEO at Next50, a Denver-based organization that provides grants to projects that value aging with dignity, said that folks today really need a mix of resources when it comes to retirement, since pensions really aren’t available to most workers today.
“I love that there are creative solutions being offered by public entities and private entities to help you save for retirement,” Kaldes said. “A catastrophic event will bankrupt you and even if you don’t have a catastrophic event but you need home health care, the cost is astronomical, particularly in the state of Colorado where it’s one of the top 10 most expensive states for home health care.”
He feels banks could become more involved in figuring out new products beyond life insurance and annuities, which “have a bit of a branding issue and they’re not available to people with lower incomes,” he added.
But getting an option out there for more workers, as the state and the Colorado Springs Chamber has done “is really creative.”
One program, multiple employers, custom retirement
Ramon Alvarez, owner of Minuteman Press in Colorado Springs, is in the process of moving his small company to the chamber’s new multiple-employer plan, even though he already had one.
“It was an off-the-shelf product that was just about compliance. There was no support whatsoever in terms of education and access to information and something that would help me as a business owner,” Alvarez said.
Not all of his eight employees participated because the old plan was so basic. But now, the staff is excited, partly because Alvarez plans to offer some sort of company match. While any savings are “a wash,” he said that’s because the old plan was limited. For the same money, he’s getting Jenson Group’s handholding and better options for his staff.
“We did not think we could afford this,” he said. “Now that I’m able to do it in a way where I can get expert advice and be able to match contributions, that’s a huge deal for me. That’s a huge deal for our employees as well.”
The chamber’s plan also reduces the administrative burdens on the employer. Depending on a company’s size, savings can be “anywhere between $1,500 to $3,400 a year in fees and to operate the plan,” Carle said. “If you get into a larger company that has more than 100 employees, they spend thousands of dollars a year on an audit. Through our plan, the audit cost is cut down significantly to where they’re saving thousands of dollars.”
Of the Chamber’s nearly 1,000 members, Carle believes 10% to 15% will participate. So far about 30 local companies have expressed interest in joining or are in the process of doing so, Carle said. But because it does rely on participation from multiple employers, there will be more savings and investment options as more companies join.
“They’re saving on the cost of fees and if they’re not, they’re getting expert advice as well,” he said. “A lot of companies are utilizing plans that might be cost effective but there’s nobody really managing the plan. We provide a solution that’s kind of middle ground.”
➔ Find out more at the Colorado Springs Chamber town hall, 16 at 4 p.m. >> Details
Pending Colorado laws easing the strain of growing older
Kaldes, from Next50, is very concerned about what will happen to Medicaid at the federal level and its impact on Colorado consumers. But he still follows a number of state legislation. Here are three aimed at supporting older adults that passed at this year’s session in Colorado, which ended last week.
Sun economy stories you may have missed
➔ Jared Polis vetoes Colorado labor movement’s priority bill. Union leaders say they’ll be back. >> Read story
➔ Jared Polis will withhold state grants to Colorado cities, counties that don’t comply with new housing laws. The governor issued an executive order Friday requiring local governments to show they’re enacting policies to encourage more housing in order to qualify for transportation and energy funds. >> Read story
➔ Denver is starting to see results from COVID-era investments in housing for people who are homeless. In the span of about two weeks, the metro area is celebrating “ready-to-work” housing in Englewood, a family hotel on Colfax, and an affordable apartment complex in southwest Denver >> Read story
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Reader poll: It’s the economy!
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Other working bits
➔ Colorado added 8,400 jobs in April, as unemployment rate stayed at 4.8%. Most of the new nonfarm jobs added were in the private sector, according to the monthly jobs report from the state Department of Labor and Employment. The top industries to see job gains were educational and health services followed by leisure and hospitality. Meanwhile, March numbers were revised upward to 7,600 jobs instead of 6,800.
The number of Coloradans in the state’s labor force also grew by 2,600 individuals to 3,283,400 workers. But the overall labor force included an increase of 2,100 unemployed workers, which left the state’s unemployment rate unchanged at 4.8%. The nation’s unemployment rate was also unchanged between March to April at 4.2%. >> See April report
➔ Imposter found in the case of the capital T. Colorado Attorney General Phil Weiser filed a lawsuit to shut down Thyssenkrupp Materials in Denver after it was caught pretending to be a legitimate company of the same name but with an upper-case “T.” An individual named “Jeremy Vasquez” filed to start up the impostor company in December 2022 and registered four other entities with the Secretary of State’s office.
According to the lawsuit, Vasquez opened a bank account at PB&T Bank in Pueblo and tried to deposit a check from a vendor of the real thyssenKrupp Materials, a company in Michigan. But the vendor thought something was amiss and alerted the real company about the diverted check, which was also brought to the attention of the Colorado Bureau of Investigation. CBI said there’s a trend of “bad actors who commit mail theft by incorporating a business under a name similar to that of a legitimate entity to steal and deposit checks,” said the lawsuit.
While the fraudulent ThyssenKrupp appears to be no longer active, the business record still exists in the Secretary of State’s database. The AG’s suit aims to dissolve the impostor company down for good to avoid “the possibility of this exact scheme to be replicated with other vendors of the legitimate thyssenkrupp.” >> View lawsuit
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