Delaware Lawmakers Approve Auto-Enrollment for State 457(b) Plan

The Delaware General Assembly passed a measure to establish automatic enrollment into the state’s 457(b) deferred compensation plan for newly hired state employees. The bill cleared the Delaware House of Representatives in a 32-to-8 vote on June 11 and the Delaware Senate unanimously on June 30. Governor Matt Meyer, a Democrat, needs to sign the bill for it to become law.

According to the bill’s text, new state hires defaulted into the Delaware Defer, its retirement program, will start at an initial contribution rate of 3% of compensation. Delaware’s Plans Management Board, which oversees the plan, maintains discretion to increase the automatic default contribution rate by either 1% or 2% of compensation annually, with a cap of 15% of compensation.

Delaware employees maintain the right to shift the contributions, which begin within 90 days of starting their employment with the state, and the employees can also opt out of the plan within 120 days of hiring and have any contributions refunded, according to the bill. State employees who work under a collective bargaining agreement could choose to participate.

The Delaware Public Employees Retirement System, which had $16 billion in assets as of fiscal 2025, administers retirement benefits for nearly all public employees in the state, including teachers. The PERS system administers nine different pension plans for groups of public employees. In addition, according to the U.S. Government Accountability Office, 92% of employees of state and local government in Delaware participate in Social Security, according to information reported by the National Association of State Retirement Administrators.

The state also offers Delaware Earns, a separate state-run, low-cost retirement savings program for private sector workers who lack access to a qualified employer plans such as small businesses.

“Bridging the retirement gap has been a top priority for my office, and between our improvements to DEFER and the development of Delaware EARNS, we’ve put thousands of Delawareans in better position to develop long-term financial security,” Delaware Treasurer Colleen Davis said in a statement. “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.”

Delaware’s move follows a national trend accelerated by SECURE 2.0 and growing concern about retirement preparedness. While automatic enrollment has become standard in the private sector 401(k) market, public sector 457 plans generally require specific state authorization, making Delaware’s legislation noteworthy beyond the state itself.

According to the National Association of Government Defined Contribution Administrators, 15 states now allow for some auto enrollment of public sector employees, 12 offer full auto-enrollment and 23 states prohibit auto-enrollment.

According to NAGDCA, 94% of public employees automatically enrolled into state plans stay enrolled.

“Too many people put off saving for retirement because it takes an extra step they never get around to,” Delaware State Senator Trey Paradee, who sponsored the state senate version of the bill, said in a statement. “Automatic enrollment is one of the most effective tools we have for increasing participation in our savings plans, and I’m proud that we built strong bipartisan support to get this across the finish line for our state employees.”