State House, Room 416A
Boston, MA 02133
State House, Room 156
Boston, MA 02133
Dear Chair Brady, Chair Ryan, and esteemed members of the Joint Committee on Public Service,
Thank you for the opportunity to submit written testimony in support of An Act expanding access to retirement savings (HB2825/HB41/SB1879).
MassBudget is a nonpartisan, nonprofit 501(c)3 research and advocacy organization. For thirty-seven years, we have provided rigorous research and policy analysis to create a more inclusive Commonwealth. We are particularly focused on equitable policies that help households with low incomes, working families, and communities of color. MassBudget strongly believes that all workers deserve access to a retirement plan. Today, we can start by expanding access to nonprofit workers in particular. Providing affordable and accessible retirement savings plans to all small and medium-sized nonprofits in Massachusetts will allow their workers greater economic security when they retire.
As of 2024, there were more than 31,000 nonprofit public charity organizations registered in Massachusetts. These organizations employ more than 550,000 workers, accounting for 17.6 percent of the state’s workforce.1 The Commonwealth ranks as the third highest state in the nation in terms of nonprofit employment as a percentage of total private sector employment.2
The Coming Retirement Shortfall
According to a recent study commissioned by the Pew Charitable Trusts, Americans are insufficiently saving for retirement. Many Americans continue to rely on Social Security as a primary source of income during retirement, but that system may no longer be as dependable as it once was – and it was never intended to be the sole source of income for retirees. As workers age, the lack of retirement savings will negatively affect their quality of life and place an increased burden on state budgets to care for these individuals. From 2021-2040, this lack of sufficient retirement savings will cost Massachusetts more than $13.9 billion in “increased public assistance costs, reduced tax revenue, decreased household spending and standards of living, and lower employment”.3 We are already four years behind in assuring that employees have access to suitable retirement plans; each year lost will cost the state more and more to support under-resourced retirees.
Additionally, the high cost of living in Massachusetts may also force retirees with very limited resources to leave the state in search of a more affordable lifestyle. According to a recent MassBudget report4, IRS outmigration data show that more than eight out of every ten outmigrants from Massachusetts was from a household with income under $200,000 per year.
Expanding Affordable Retirement Access to Small and Medium-Sized Nonprofits
When Americans have access to retirement plan savings options through their employers, they are more likely to participate and save for their own futures.5 To encourage retirement planning, the Commonwealth launched the Massachusetts Connecting Organizations to Retirement Plan (“CORE Plan”), a state-administered 401(k) plan in 2017 that small nonprofits (20 or fewer employees) could join.6 The plan is administered through the Office of the State Treasurer and Receiver General, which takes on most of the administrative responsibilities. Due to economies of scale, the plan sponsor is better equipped to offer lower fees and expenses than typical private plans. This made it more affordable for small nonprofit employers to offer retirement plan benefits to their employees. As of May 2024, 200 small nonprofit organizations and 1,900 employees had balances7 in the CORE Plan.8 Surprisingly, this only represents 0.3% of the total Massachusetts nonprofit workforce. MassBudget supports the bills before you that expand access to the CORE Plan to more of the nonprofit sector’s workforce than currently served.
More needs to be done to expand access to retirement savings via the CORE Plan for the majority of nonprofit workers in Massachusetts, especially those who work at organizations that employ more than 20 but fewer than 100 employees. By increasing the employee threshold for nonprofits to access the CORE Plan, offering smaller nonprofit employers (1-99 employees) a public alternative to commercial 401(k) and Individual Retirement Account (IRA) plans, the Commonwealth can give more nonprofit-sector workers access to quality retirement plans by making it easier for their employers to offer them.
Within the private sector, employers are generally not required to offer their employees a retirement savings plan9; however, many try to offer this wealth-building benefit to their employees if the organization can afford to. Since the fees to participate in a traditional retirement plan can be burdensome on an employer, larger employers (100+ employees) are 29 percentage points more likely to offer this important benefit for their employees than organizations with 1-99 employees.10 Consequently, almost half of all small organizations (41%) with under 100 employees do not offer retirement benefits at all for their employees. If given the opportunity, those employees at small and medium-sized nonprofits who currently do not have access to a retirement plan were given the chance to, nearly three-quarters would take advantage of this wealth building tool.11 This lack of access to retirement plans, especially when so many people would take advantage of it if offered, creates inequities to wealth building for employees and their families.
In closing, I urge you to report out An Act expanding access to retirement savings (HB2825/HB41/SB1879) favorably. When employees are given the chance during their career to save a small amount towards their own retirement, they could significantly impact their ability to independently afford their lifestyle during retirement years and it gives them the opportunity to build wealth. By expanding access for more nonprofit organizations to the CORE Plan, the impact would be extremely positive for employees, employers, state programs, and taxpayers. Employees and their families deserve an opportunity to sustain their quality of life in their retirement years without the need for outside assistance and to build wealth, which would in turn save billions of dollars for the state over the next few decades and afford workers a better quality of life.
Thank you for your time and consideration.
Respectfully submitted,
Gregg Grenier
Vice President
Massachusetts Budget and Policy Center
Endnotes
1 National Center for Charitable Statistics, “Number of Nonprofits, 2024, Table: Massachusetts,” accessed on Apr. 14, 2025.
2 Bureau of Labor Statistics, “Nonprofits accounted for 12.8 million jobs, 9.9 percent of private-sector employment, in 2022,” Aug. 16, 2024.
3 Scott, J., and Blevins, A., “State Automated Retirement Programs would Reduce Taxpayer Burden from Insufficient Savings,” Pew Charitable Trusts, June 2, 2023.
4 “New Census Migration Data for 2023 – Modest Domestic Outmigration Offset by Larger International Inflow,” Massachusetts Budget and Policy Center, Oct. 21, 2024.
5 Nayar, S., “Retirement savings in the US are dismally low. These New England states are trying to give them a boost.,” The Boston Globe, April 17, 2024.
6 “CORE Plan for Nonprofits,” Commonwealth of Massachusetts, https://www.mass.gov/core-plan-for-nonprofits
7 Note: This figure represents active account balances within an employer’s managed plan. Active accounts may represent former employees who have not rolled their balances to a new employer – either within or outside of the nonprofit sector and/or Massachusetts. Therefore, the total current nonprofit employees being serviced by the CORE Plan is unknown but is less than 1,900.
8 “State’s Nonprofit Retirement Plan Celebrates Enrollment Milestone,” Massachusetts Office of State Treasurer and Receiver General Deborah B. Golberg, May 20, 2024.
9 “What You Should Know About Your Retirement Plan,” U.S. Department of Labor, https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/publications/what-you-should-know-about-your-retirement-plan#:~:text=Employers%20can%20choose%20whether%20to,continue%20to%20offer%20a%20plan.
10 Bureau of Labor Statistics, “Employee Benefits in the United States – March 2023,” Sept. 21, 2023.
11 Bureau of Labor Statistics. July 21, 2017. “Employee Benefits in the United States — March 2017.”
