Appropriations committee pauses amendment to Vermont Saves auto‑escalation after treasurer's office objects

Representative Anne Donahue on March 28 presented an amendment to the House Appropriations Committee that would alter language in the Vermont Saves section of the committee's appropriations bill, proposing either to remove an automatic escalation provision or change a mandatory "shall" to a permissive "may."

The amendment concerns a provision in section C2 of the bill that authorizes the treasurer to implement an annual, uniform increase in participating employees' contribution rates. Donahue said the change responded to constituent concerns about how employees are informed and suggested temporarily keeping the status quo or making the escalation permissive while communications and notice issues are reviewed.

The committee heard direct opposition from the treasurer's office. Becky Wasserman of the state treasurer's office said, "the treasurer's office is not in support of this amendment," and explained the auto‑escalation feature is a common element of state auto‑IRA programs. She said auto escalation typically increases contributions by 1% after a participant has been in the program for a year, and participants receive advance notice and may opt out or change their contribution levels.

Wasserman told the committee the provision is included in every operating state auto‑IRA program and that some states are raising their caps from 8% to 10%. She also clarified timing: the auto‑escalation would not apply immediately and would not kick in until calendar year 2027 at the earliest because participants must have been in the program for a year before escalation applies. She reported the program has roughly 1,000 registered employers and said the office had researched the change and believed the increase aligned with trends in other states and federal changes to retirement plan policy.

Donahue described constituent complaints about notification practices and the risk that messages appearing to come from the program might actually arrive from other addresses, creating confusion. She offered a middle ground — changing the statutory language from "shall" to "may" — calling it "a little bit of a yellow blinking light" to slow implementation while communications are reviewed.

Committee members asked for clarification about contribution limits. Wasserman said the 8% (and the proposed 10%) cap applies to the treasurer's authority to auto‑escalate annually, not to an individual's ability to set their own contribution. "An individual doesn't have a cap," she said; participants choose their own withholding and the system will flag IRS limits if participants approach maximum contribution thresholds.

Given competing concerns about participant notice and the treasurer's office recommendation to retain the feature, the committee decided not to adopt the amendment immediately. Members requested a substitute amendment that would remove the proposed change increasing the auto‑escalation cap (keeping current language in place) and agreed to pause formal action while staff prepare the substitute and the panel reconvenes shortly. No formal vote on the amendment was taken during the March 28 meeting.

Next steps: the committee requested a substitute amendment to remove the cap change and said staff would return to the committee within roughly a half hour to continue consideration. The treasurer's office and committee members agreed additional review of communications and notice practices should proceed before any automatic increase is implemented.