Treasurer has right focus, but must find right approach: Our view

Listen to this article

That perk partly accounts for why we have one of the oldest populations. We also offer retirement meccas, such as Willow Valley in Lancaster County and Normandie Ridge in York County, that attract people from Maryland and other places with higher costs of living.

Those good trends come with some not-so-good trends. A report commissioned by the state Treasury Department and conducted by Econsult Solutions Inc. found many residents do not save for retirement. Instead, they end up tapping government services in their golden years. By 2030, the extra cost of public assistance could reach more than $1 billion per year.

State Treasurer Joe Torsella noted that 2.1 million state residents do not have a way to save where they work. One possible solution involves automatically enrolling workers in 401(k) plans and allowing them to opt out later.

Encouraging savings is a fine idea. And responsible businesses want to be part of the solution — as long as it doesn’t become a mandate or lead the state to start mining workers’ paychecks. As the labor pool tightens, companies that lack basic perks will not attract talent. It behooves them to offer some kind of plan, and government leaders could help develop market-driven, common-sense solutions, as the 401(k) has proven to be.

Whether they tweak the existing system or go in a new direction, any government proposals must be cost-effective and simple to administer. And for them to make a difference, we all must relentlessly educate workers: A retirement account immune from state income taxes is an incentive to save, to be sure. But if you don’t save a dime, there is no tax benefit, no dividends and no comfortable retirement.

It’s basic sales best administered with a light touch. Demonstrate why it is in everyone’s self-interest to save and make it as easy as possible to do so — without imposing any unnecessary burdens on business. We agree with Torsella that greater retirement savings would resolve the commonwealth’s financial concerns. State leaders just need to resist the heavy hand of mandates.