Michael Kreps of Groom Law: Cool Things You Might Not Know

Michael P. Kreps, Principal

One thing we love about our friend Michael Kreps is that despite his impressive bio and accomplishments as a principal at Groom Law Group and as senior pensions and employment counsel to the Senate HELP Committee, he is more spark than reserve – and he knows more about the industry than we are likely to forget in our lifetime.

It just so happens that the Chairman of the Ways and Means Committee Richie Neal is particularly interested in it. It's an issue that he's been passionate about for a long time. So, we see a bi-partisan legislative path on a bill that is a grab bag of fix-it and clean up items for the retirement system. And then we also see a larger scale set of reforms in the Build Back Better Act, which is the partisan process. The Build Back Better Act is where the people in Congress, at least on the democratic side who care about retirement, are focused. It’s a priority for them that we should have universal automatic enrollment.

In addition to imposing a requirement of the universal automatic enrollment on most employers, excluding all but the newest and smallest employers, it also then tries to make it easier on employers by providing a couple of different types of new plans employers can adopt that are pretty low cost, or don't have much burden on the employer. One is a 401(k) that doesn't require any … (What is that? Bookmark HERE to get the rest.)

Michael – what a terrific conversation. Thank you for sharing your expertise with us! Want more? You can connect directly with Michael Kreps by email here. You can follow Michael’s work at Groom Law Group here. You can also connect with Michael on social here.

Chart-san, can you read this for us? Why yes! Check it out … funded accounts across the three programs are so close to crossing the 400,000 mark. When Oregon’s 9/30 numbers come in, we’ll be there. That’s more than 2x where we were a year ago. Combined assets are over $330 million.

Average account balances are now at $829. They dipped a little when California’s data came in because CA has so many new accounts. As reported recently, Oregon’s average account balance is higher ($1,175) because the program has been in place longer. Average 30-day saver contribution rates are $113, $138, and $143 (Illinois, Oregon, California). At these rates, balances will increase by $1,300 to $1,700 annually, not including investment impact. Employee opt out rates are steady, at about 30%.

Employer perspective: More than 16,000 employers are now facilitating state Auto IRAs. Another 29,000 have registered to facilitate and are in the process of providing employee roster information, which is the first step in the employee engagement process, or preparing to start payroll deductions for participating employees.

Virginia (workforce 4.3 million) – The Virgnia529 program has hired a Retirement Program Director for the new state-facilitated retirement savings program scheduled to launch in 2023. Mr. Peter Thompson joined the team of CEO Mary Morris this September and is hard at work already. If you’re reading this on Thursday the 21^st, today is the first meeting of the Virginia529 Retirement Program Advisory Committee. The meeting is expected to provide an orientation to the program and its history as Virginia prepares to move into implementation mode.

Colorado (workforce 3.2 million) – The Colorado Secure Savings Program Board met October 18, 2021. At the top of the meeting, [Woohoo!] Colorado and New Mexico shared that they intend to partner together and that they are working on a Memorandum of Cooperation. The Board reviewed an amended proposed timeline for the program as well as program design elements such as automatic escalation, employer deadlines, Roth vs. Traditional IRAs and investment options.

An October 8, 2021 story in the Aspen Daily News notes that Colorado Treasurer spoke about the Colorado Secure Savings Program during a recent visit. “I think everybody understands they want to have retirement — how to actually make that happen is often not clear to people,” said Treasurer Young. “This is why we have so many people that aren’t saving.”

New Jersey (workforce 4.4 million) – An October 7 Insider NJ story reported that New Jersey’s gubernatorial candidates, Jack Ciattarelli (R) and Phil Murphy (D), both support the state’s Secure Choice program that would “create a voluntary and portable retirement savings option for around 1.7 million private-sector New Jerseyans who currently do not have a way to save for retirement at work.”

I once began a conversation with a marketing firm by asking, “Where should we advertise to get the best bang for our buck?” They answered the question with their own question, “How much money do you have?”

When starting a new program or service, like a state-sponsored retirement program, marketing is incredibly important for getting out the message to those impacted and eligible, so they know about it and have an opportunity to make an informed choice. It’s also a key factor in ensuring the program can achieve its goals to further people’s retirement security and ultimately pay for itself. This is true even if the program includes a mandate for employers to participate, and it’s even more critical if employer participation is voluntary, to help convince folks to join.

Stay tuned! / Joel

Columnist and Senior Associate Joel Metlen is based in Oregon. Joel is a pioneer of the state facilitated retirement savings space, woven into a career of public service and innovation. At OregonSaves, Joel’s responsibilities ranged from marketing and employer engagement to operations and data analysis. You’ll see his insights from that experience, and more, here.

We’re going to talk about this in more detail very soon, but NIRS’ Tyler Bond has a new infographic out on Middle Class Ownership of Financial Assets and we think you’re going to find the results a little disturbing.

Are people getting the message – and what are the implications? Our friends at Boston College find that more people – a few more people – are delaying taking Social Security in favor of a higher retirement benefit.

And, across the pond, NEST is finding that positive communication helps increase retirement savings account engagement and use. We like this! Three positive messages that had a dramatic impact:

In the Presidential zone: This week we listened to this podcast on Presidential libraries by Delaney Hall for 99% Invisible but found it just a hair acerbic. What do you think? Maybe it’s because we hold a fondness for all things library, and we don’t mind the quirks. We’re thinking about adding presidential libraries, baseball parks and national parks to our to-do list.

Okay, okay! You know we love dogs around here, and it’s almost Halloween. Please give a friendly Hello to Pickles Kreps! Pickles, you are just styling, getting us ready for the season. We’ll take the money. You can keep the TNT ❤.

On other frontiers, this week we were introduced to the spot where Oregon’s first provisional government was formed, in 1843.

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Massena Associates provides process, policy, and implementation consulting on retirement savings programs and products.

Our clientele includes states, governments, policy organizations, and private sector providers. Our specialty – efficient, targeted results. We are an active speaker on retirement security topics, including state-facilitated programs, MEPs and more.

If you’d like to explore working together, we welcome the conversation. Connect with us here, and at 339-236-0684.

Looking for a great retirement savings innovation resource? Led by Dr. Alicia Munnell, the Center for Retirement Research at Boston College develops and hosts terrific content and proprietary research related to states, financial security, social security, and more.

The Georgetown Center for Retirement Initiatives, Exec Angela Antonelli, provides excellent information on state-based and other retirement security innovation and policy.

Pew’s Retirement Savings Project studies the challenges and opportunities for increasing retirement savings and is another great resource - check out the work of John Scott and his terrific team.

If you want a great source of broad-based, consumer-focused retirement news, Jeffrey H. Snyder’s The Morning Pulse is your ticket. You can subscribe here.