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Vermont Bill Creates Retirement Plan for Small Businesses

Volunteer program is aimed at companies with 50 or fewer employees.

By Michael Katz

The Vermont General Assembly has passed a bill to create a voluntary public retirement option for small businesses known as the Green Mountain Secure Retirement Plan.

The plan will be based on a multiple employer plan model, and open to businesses with 50 employees or fewer that do not offer a retirement plan, as well as to self-employed workers. If an employer adopts the program, auto-enrollment of employees will occur, but employees will have the choice to opt out.

“The passage of this bill will allow the state to make substantive steps towards implementing a voluntary retirement program for Vermonters who currently lack access to employer-sponsored retirement plans,” said Vermont State Treasurer Beth Pearce in a statement. “This program will broaden the opportunity for more Vermonters to be better prepared for retirement and in doing so strengthen the economic vitality of our state.”

According to an AARP report cited by Pearce, some 104,000 Vermont residents, or 45% of the state’s private sector employees, do not have access to employer-sponsored retirement plans. “I look forward to working with businesses, advocacy groups, and other stakeholders to implement a program that works for all Vermonters,” she said.

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The committee that advised the legislature on the bill recommended a three-year check-in after the start of the program, when an analysis of participation and potential strategies to increase participation would take place. The program is expected to be implemented in January 2019.

The program will initially be supported by fees that would be paid by the program’s participants, but allows for the possibility for employer contributions in the future. It also said that until sufficient assets have been accumulated, program costs will exceed revenues during the startup phase.

The Treasurer’s Office will have financial service providers subsidize the startup cost in exchange for a longer-term contract, essentially loaning its own capital to the program. If the committee determines that additional financial support is necessary for start-up and/or ongoing costs, the Treasurer will inform the general assembly prior to any decision on implementation.

Photo by: cglade

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Home > News > Risk > Canadian Province Strikes Deal to Protect Paper Mill Pension
Risk

Canadian Province Strikes Deal to Protect Paper Mill Pension

Company uses hydroelectricity plant assets to guarantee letter of credit.

By Michael Katz

The Canadian provincial government of Newfoundland and Labrador, and Kruger Inc., the parent of paper mill Corner Brook Pulp and Paper, have agreed to a deal intended to secure the future of the mill workers’ struggling pension plan.

According to the terms of the agreement, the government will acquire a security interest in Corner Brook’s power assets at Deer Lake and Watson’s Brook in exchange for an irrevocable letter of credit from a financial institution backed by a government guarantee. The letter of credit will be held by a trust for the benefit of pension plan members, with government and Corner Brook representatives as co-trustees. The deal will reportedly allow the paper company to add $88 million into the pension plan.

“Our government is committed to protecting the interests of pension plan members, and this arrangement helps ensure the sustainability of the pension plans into the future,” said Perry Trimper, Minister of Service for Newfoundland and Labrador in a statement. “This innovative solution will enable the company to meet its pension funding obligations, while allowing it to focus on meeting its commitments to capital investments and operations under agreements made in 2014.”

The deal stipulates that if Corner Brook ceases operation, the letter of credit would be called by the trustees to secure any outstanding pension obligations, the amount of which would be deducted from the purchase price of the power assets and water rights. According to a 2014 power assets and water rights purchase agreement, the government has a pre-existing obligation to purchase the company’s power-generating assets in the event of the paper mill’s closure.

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The government said that an amendment to the Schedule of the Loan and Guarantee Act, 1957, is required and will be introduced during the current session of the House of Assembly.  Amendments will also be necessary for the Pension Benefits Act Regulations for the deal to go through.


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