DELAWARE- Newly hired Delaware state employees would be automatically enrolled in the state's deferred compensation retirement savings program under legislation approved by the Delaware General Assembly and now awaiting Gov. Matt Meyer's signature.
House Bill 423, sponsored by Rep. William Bush and Sen. Trey Paradee, would make automatic enrollment the standard for new state employees participating in Delaware DEFER's 457(b) retirement savings plan. Supporters say the change is intended to increase participation in retirement savings and help more public employees build long-term financial security.
The 457(b) plan is part of Delaware DEFER, which also includes 403(b) and 401(a) retirement plans. The program offers public employees tax-advantaged retirement savings options, investment choices, financial planning resources and access to local representatives.
Treasurer Colleen Davis said the legislation continues the state's efforts to improve retirement readiness for public employees.
“Automatic enrollment means that saving becomes the default rather than the exception, and that’s the kind of common-sense change that makes a meaningful difference in people’s lives,” Davis said.
The Treasurer's Office said Delaware DEFER experienced a record month in May, following an enrollment campaign held during employee benefits open enrollment, which produced a 45% increase in new accounts compared with the same month a year earlier.
State leaders say program participation also expanded after House Bill 130 became law in 2023, allowing casual and seasonal state employees to enroll in the 457(b) plan.
Sen. Paradee said many workers delay enrolling in retirement plans even when they intend to save.
"Too many people put off saving for retirement because it takes an extra step they never get around to,” Paradee said. “Automatic enrollment is one of the most effective tools we have for increasing participation in our savings plans.”
Under the legislation, the State of Delaware's Plans Management Board will establish the default contribution rate for automatically enrolled employees. Workers may change that contribution amount at any time. Contributions would begin within 90 days of starting state employment.
Employees who do not wish to participate may opt out within 120 days of being hired and receive a refund of any contributions already made.
Lawmakers say the measure received bipartisan support in the General Assembly, including unanimous approval in the Senate. It will take effect after Gov. Meyer signs the bill and the Office of Management and Budget certifies that payroll system upgrades needed to administer the program have been completed.
