Massachusetts Budget and Policy Center: Tending to the Nest Egg

MassBudget    Information.    Participation.  Massachusetts Budget and Policy Center    Democracy. May 17, 2018 Tending to the Nest Egg:  Plan could help nonprofit workers build retirement security A new, state-run plan could help more workers in the nonprofit sector build greater economic security when they retire. The Massachusetts Budget and Policy Center's new report, Tending to the Nest Egg: Plan could help nonprofit workers build retirement security, explores the barriers that workers - particularly those at small employers - face when saving for retirement and a Massachusetts plan that begins to address some of those barriers. Setting up and managing retirement plans can be too expensive for small employers. And when they do offer plans, the participants tend to pay higher fees than those at larger employers. In late 2017, Massachusetts launched a state-administered 401(k) plan - the Connecting Organizations to Retirement (CORE) Plan. Small nonprofits with 20 employees or fewer are able to join this plan for which the Office of the State Treasurer and Receiver General will take on the bulk of administrative responsibilities as plan sponsor. Through economies of scale the treasurer, as plan sponsor, is better equipped to obtain lower fees and expenses than in typical private plans. Even seemingly small fee differences can have a significant effect on retirees' savings. The chart below illustrates how differences in fees can affect long term returns under the CORE plan's upper- and lower-range fee structures compared with typical fee structures of comparable 401(k) plans. Massachusetts is one of the only states that is implementing this type of plan for nonprofit workers. Read the full report here. The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 15 COURT SQUARE, SUITE 700 BOSTON, MA 02108

Massachusetts Budget and Policy Center, 15 Court Square, Suite 700, Boston, MA 02108