State retirement plan execs ponder effect of new saver's match

The executives overseeing CalSavers, OregonSaves and Illinois Secure Choice — the nation's three largest state-run retirement savings programs — applaud the new saver's match introduced as part of the SECURE 2.0 Act, but they have mixed views as to whether the new incentive will increase participation in their programs.

"I think it could," said Katie Selenski, executive director of the $410 million CalSavers program, Sacramento, explaining that the saver's match is "essentially new money on the table."

The new saver's match of up to $1,000 from the federal government will become available to low- and middle-income retirement savers in 2027. It will replace the current less generous saver's credit, which has not been widely used.

"This is a much better carrot," Ms. Selenski said, referring to the greater attractiveness of the saver's match over the saver's credit.

One of the biggest drawbacks to the current saver's credit is that it is non-refundable, meaning the credit is applied to the taxes that savers owe. If low- and middle-income savers owe no tax — and there are many — they receive no benefit.

The new incentive, in contrast, will match 50% of what low earners put into their retirement accounts, up to $2,000, for a maximum match of $1,000. The money will be deposited directly into their retirement accounts.

The income thresholds for the 50% match vary by tax filing status. A couple filing a joint tax return, for example, will receive a full 50% match if their adjusted gross income is $41,000 or less.

Michael Parker, executive director of the Oregon Treasury Savings Network, which oversees the $174 million OregonSaves program, Salem, said the "additional bump on the saver's credit" gives savers even more reason to join the program, but he is still "not altogether sure" that it will in fact increase program participation.

Not everyone in the program will be eligible for the match because income levels vary, Mr. Parker said.

"I think the jury is still out," he said.

Christine Cheng, director of the $105 million Illinois Secure Choice program, Springfield, is also unsure about whether the saver's match will boost participation.

"I think that's an open question," she said. While it's possible that the government match might be "what pushes someone over to save," some workers may simply be too financially stretched, she said.

"Some workers are in a place where the economics aren't lining up in terms of their income exceeding their expenses," Ms. Cheng said.

All three agreed that raising awareness of the match will be critical and are already thinking about how to promote the new incentive.

"We really want folks to take advantage of it, so it really does become a communication issue for us to get that message out," OregonSaves' Mr. Parker said.

Their efforts will support the U.S. Treasury Department, which was directed under SECURE 2.0 to come up with a plan to promote the match by July 1, 2026.

"I think there's a lot that needs to happen in terms of awareness both at the federal level and then at our own individual state level," Ms. Cheng said.