Minnesota and Hawaii Launch State-Run Retirement Plans, Enrolling Workers with $2.75 Billion in Accounts

Minnesota and Hawaii are set to launch mandatory retirement savings programs for workers at companies that do not offer pension or 401(k) plans. The initiatives will automatically enroll eligible employees into state-administered retirement accounts, requiring no action from workers to participate unless they opt out. This move expands a growing nationwide effort to improve retirement security for millions of Americans lacking access to employer-sponsored plans. The rollout comes as state-run retirement programs continue to gain traction, with more than $2.75 billion in total assets already held across similar programs in states like California, Oregon, and Washington. These figures reflect both employee contributions and investment growth within the accounts. In Minnesota, the program will be managed through an agreement with a private custodian, while Hawaii’s plan is structured as a statewide payroll deduction system tied to local tax infrastructure. Employers with fewer than 25 employees are generally exempt from participation requirements under the new laws, although larger firms must comply. Employees will contribute a percentage of their pay—typically between 3% and 5%—with automatic escalation built into the system. The default investment option will be a target-date fund, designed to adjust risk profiles as participants approach retirement. The launches mark a significant shift in retirement policy, affecting tens of thousands of workers across both states. Financial advisors anticipate increased demand for retirement planning services and greater scrutiny of account performance. Employers who previously avoided retirement obligations may face higher administrative burdens due to required reporting and payroll deductions.