Photo / Tim Greenway
Elizabeth Bordowitz, center, MERIT’s executive director, with Quoddy Shoes owners Kevin and Kirsten Shorey. Kirsten says enrollment in MERIT was painless.
By Laurie Schreiber, original article posted by Mainebiz on January 27, 2025.
Len Libby Candies in Scarborough dates back nearly a century, but its workforce faces a modern challenge. Most are part-time workers, with flexible hours — and that’s typically a group that may not have a lot of options for retirement savings.
“We have a ton of homemakers for the flexible, part-time jobs. Lots of students,” says John DeGrinney, who owns and operates Len Libby Candies with his wife Gisele.
John and Gisele DeGrinney, co-owners of Len Libby Candies in Scarborough, encouraged employees to sign up for the MERIT retirement plan.
With 33 employees, anything that helps employees plan for the future is something they’ll take a look at.
That was the case last year, when the small business took note of a new state program that provides retirement savings plans to workers who otherwise don’t have that access.
Len Libby Candies is one of more than 2,500 employers that have enrolled in the Maine Retirement Investment Trust, or MERIT, over the past year.
“It started a conversation about how, as a small family business, we can secure a stable retirement for our team,” says DeGrinney. “It’s a piece of that puzzle.”
So far about six employees have enrolled in MERIT.
“Planning for retirement is such a difficult thing to do,” says DeGrinney. “When people indicate to me that they’re interested in it, I’m happy to administer it from my end.”
Retirement puzzle
Some 15% of private industry workers in the U.S. have access to defined benefit plans and 67% have access to defined contribution plans, according to the U.S. Bureau of Labor Statistics.
Defined benefit plans provide employees with guaranteed retirement benefits based on plan formulas, but the model is less likely to be offered today.
Defined contribution plans determine individual account values based on amount of money contributed and rate of return. This would include 401(k) plans.
A number of states are attempting to boost retirement saving by adopting statewide automatic retirement programs, or “auto-IRA” policies, that require employers not currently offering an employer-sponsored retirement plan to either establish such a plan or enroll employees in state-facilitated individual retirement accounts, according to the Georgetown University Center for Retirement Initiatives
Beginning in 2017, California, Illinois and Oregon were three of the first states to implement statewide automatic enrollment programs, according to the Pew Charitable Trusts.
In 2021, Maine joined the movement when the legislature enacted “An Act to Promote Individual Retirement Savings through a Public-Private Partnership” to bring a workplace retirement savings opportunity to the 40% of Maine workers with no workplace retirement plan.
The act created the Maine Retirement Savings Board, which established the Maine Retirement Investment Trust, or MERIT, as an automatic, low-cost retirement savings program.
Automatic enrollment
The program, envisioned as an easy way for employers to offer retirement savings for their employees, requires employers with five or more workers not offering a qualified retirement savings plan to register for MERIT and begin using it in 2024.
Employees will be automatically enrolled in a Roth IRA Account. Once enrolled, the account will be funded from an employee’s wages unless the employee opts out.
A pilot, launched in late 2023, enrolled 16 employers and 169 employees. The full rollout began in January 2024 to nearly 10,000 employers and 200,000 employees — about 40% of Maine’s private-sector workforce.
There is no cost for employers, minimal administrative requirements and no requirement for an employer match. Covered employees have 5% of their paycheck automatically contributed to a Roth IRA account. MERIT allows voluntary enrollment by self-employed individuals and workers with employers who aren’t eligible for the program.
Organizations already offering qualified retirement plans are exempt but must certify their exemption with MERIT.
Enforcement will begin in 2025 for employers who were required to register with MERIT in 2024.
Ongoing rollout
So far, the program has registered 2,506 employers and has enrolled 12,015 employees with funded accounts totaling over $8.2 million.
The program will continue to reach out to the approximately 3,500 employers that haven’t registered or haven’t certified that they’re exempt, says Elizabeth Bordowitz, MERIT’s executive director.
“I had a couple of employers reach out to me recently, saying, ‘We’re going to get it done,’” she says.
This year, MERIT will start the process anew for businesses that became required to participate over the past year — for example, now meeting the threshold of having over five employees — based on data from the Maine Department of Labor.
The program is attracting mixed reviews.
“I have employers saying, ‘This is one more thing the state is having me do,’” Bordowitz says. “But I think most employers are happy to do it for their employees. And I get employers somewhat disappointed that they can’t make contributions on behalf of their employees. There’s no match, which many employers have asked about and would like to do.”
At Len Libby, there were some glitches at the outset.
“The interface between our payroll company and the MERIT program was not seamless,” says DeGrinney of Len Libby Candies. But he credits Bordowitz for getting things ironed out.
“She actually came on-site and made sure our problems got resolved,” he says. “It’s top-notch in terms of responsiveness.”
Still learning
Overall, says Bordowitz, the roll-out has benefited from states with similar programs.
“We’re all, of course, still learning,” she says. “These programs are new.”
She continues, “It improves every day. The help center gets more robust. Several Maine payroll providers have set up integrations that automate the contributions process for employers. It will get easier and we will keep improving.”
Bordowitz says the program offers employers an easy-to-use opportunity to provide retirement savings for employees — an opportunity they can offer at no risk to themselves.
“Many employers understand the importance of starting retirement savings early and are glad to be able to do that for their employees,” she says.
The program galvanizes employers to consider the most suitable workplace retirement savings opportunity for them.
“Many employers will use MERIT, but others will use it as an opportunity to consider the best option and many have chosen to provide another type of workplace retirement plan where they can offer a match,” she says.
Filling a gap
For many employees, she says, MERIT helps to close the retirement plan coverage gap, particularly those working for small businesses that might not previously have had that access.
“Many young employees understand the importance of starting early to save for retirement and they are happy to have an easy way to do that,” she says.
Participants can contribute to the program through payroll deductions, making it convenient and easy to save for retirement.
“Studies show that people are more likely to save for retirement if it is easy through a payroll deduction,” she says.
Dave Karkos works on a slipper at Quoddy Shoes in Lewiston. The 19 employees produce up to 10,000 pairs of shoes each year.
If the shoe fits …
Lewiston-based Quoddy Shoes is another long-time small business, dating back to 1947. After a dormant period, in 1997 it was relaunched by Kirsten and Kevin Shorey, who traded corporate jobs near Washington, D.C., for life in Maine, where Kevin grew up and has family roots. The footwear is hand-sewn and the couple relocated the business to Lewiston to find consistent, quality hand-sewing services.
Today, the company has 19 employees, who produce up to 10,000 pairs of shoes yearly.
“We’ve hired and hired and trained a lot of local people,” says Kirsten Shorey. “Not everybody knows how to make shoes. Parents and grandparents were once involved in the shoemaking industry in Maine, but not so much anymore.”
The couple registered in MERIT early last year.
“It was really easy,” she says.
Few of their employees had ever been offered a retirement saving plan before.
“In the beginning, just a few employees enrolled,” she says. “I was surprised more people didn’t take advantage of it. But some people are skeptical. And at the time I was offering it, some families felt like they couldn’t squeak out the funds. But I’m hoping to enroll more this year.”
Bruce Boudreault hand sews a Quoddy shoe in Lewiston.
Painless process
From the employee standpoint, the program appears to be painless. “The people who enrolled are contributing by payroll deduction and it’s painless because they make the decision once and they don’t have to think about it again,” says Shorey. “They can go on the website and watch their fund grow. I do hope they’ll think about the peace of mind of saving for the future, because whatever they do is better than not doing anything.”
The process as an employer is also simple, she continues.
“It’s just a few minutes tacked onto the payroll process,” she says. “It’s easy enough for us to manage that last deduction and transfer.”
For Shorey, ease of use is a key feature of any new program. Anytime an employer, especially a small business, hears of a new requirement — “These are wonderful programs and they’re all right-minded, but you wonder as a small businessperson how much bandwidth you’ll have to do more. MERIT did a great job of explaining it.”
Shorey was planning to bring up the program again at the company’s next HR meeting — and she thinks a couple of folks who were on the fence might come around.
“I had three or four people who were on the fence, but ended up not participating,” she says. “I said, ‘Why?’ ‘Well, I really can’t afford it.’ But I think at least two or three of them have come around to see that, if they decide to divert those funds, it’s painless and they know they’re doing something good for their future. That’s what I hope to communicate.”
Before MERIT, Shorey would have loved to offer some kind of retirement savings plan.
“But we don’t have a lot of resources as a small business,” she says. “This made it accessible for us to participate.”
MERIT info
- In 2023, MERIT established a partnership with the Colorado SecureSavings Program to begin Maine’s state-run retirement savings program. Delaware and Vermont joined as partners in 2024. Combined, the partnership has approximately 90,000 accounts.
- Maine investors benefit from lower fees obtained by being a member of the partnership.
- Vestwell, a New York City 401(k) recordkeeping platform, in partnership with the Bank of New York Mellon Corp., serves as MERIT’s administrator.
- Employees can choose paycheck deduction amounts and investments.
- Employees taking no action have accounts opened for them and 5% of paycheck deposited.
- Employees can opt out.
- Employees can make changes any time.
Plan access
In the U.S., as of March 2023:
- 15% of private industry workers had access to a defined benefit plan, 11% chose to participate
- 67% of workers had access to defined contribution plans, 49% chose to participate
- Defined benefit plans provide employees with guaranteed benefits based on plan formulas.
- Defined contribution plans determine individual account values based on amount of money contributed and rate of return.
Source: U.S. Bureau of Labor Statistics
Auto-IRAs
- A number of states are attempting to boost retirement saving by adopting “auto-IRA” policies that require employers not currently offering an employer-sponsored retirement plan to either establish such a plan or enroll employees in state-facilitated individual retirement accounts (IRAs).
- In 2023, expansions of auto-IRA policies occurred in Illinois (to firms with 5 to 15 employees) and Connecticut (to firms with 5 to 25 employees). Colorado, Virginia and Maine began implementation.
Source: Georgetown University Center for Retirement Initiatives
