The Alaska House Labor and Commerce Committee advanced a state-sponsored retirement savings program Monday that would help an estimated 105,000 workers without employer plans save for retirement.

The committee approved Senate Bill 21, which creates Alaska Work and Save, an automatic-enrollment individual retirement account program for employees at businesses with five or more workers that have operated for at least three years. The bill passed out of committee as amended with individual recommendations.

Before approving the measure, members adopted an amendment allowing Alaskans to deposit their Permanent Fund dividends into existing investment accounts, not just the new Work and Save accounts. While Alaskans can already direct PFDs to certain investment accounts such as Alaska 529 plans through the annual dividend application process, the amendment would expand those options to include other existing retirement investment accounts. The amendment, introduced by Representative Sadler, had previously been heard as standalone legislation during the 33rd Legislature as House Bill 245.

"The underlying bill, SB 21, would not only establish the Alaska Work and Save program, it also lets participants in the program deposit their Permanent Fund dividends into their Work and Save accounts," Sadler said. "My amendment here simply gives Alaskans that same opportunity to deposit their Permanent Fund dividends into existing investment accounts instead of relying on the ones created under Work and Save."

Maxine LaBerge, staff to Senator Wielechowski, said the bill sponsor supported the amendment because it aligned with the underlying policy goal of helping people save for retirement.

The committee rejected three other amendments that would have made the program voluntary or expanded business exemptions. One amendment would have allowed employers to opt in or opt out of the program rather than requiring participation. Another would have let employees choose whether to participate instead of the current automatic enrollment with an opt-out provision.

LaBerge said data shows workers are 20 times more likely to save when automatically enrolled, and that 65 to 80 percent of participants in existing state programs stay enrolled. She cited low participation rates in states with voluntary programs.

"New Mexico, Hawaii, and Massachusetts all have had kind of optional programs with pretty low rates of success where the seeing is as low as only 2.5 percent of eligible savers participating in the program," LaBerge said.

A third amendment would have raised the employee threshold for mandatory participation from five to 10 workers. Senator Wielechowski said that change would disqualify 22,769 employees, roughly 13.4 percent of employers. He said businesses with five or more employees operating for three years likely already have payroll systems in place.