New Law Helps More Wash. Workers Save for Retirement
Tuesday, May 19, 2015
OLYMPIA, Wash. - Washington has taken a step toward addressing the retirement savings crisis in the state.
Gov. Jay Inslee signed a bill into law on Monday to create an online marketplace where small business owners can choose from low-cost retirement plans offered by financial service companies.
The bill was championed by Sen. Mark Mullet (D–Issaquah), who employs just over 50 people at a pizza restaurant and ice cream shop. He says he wanted to help his employees save for retirement, but found the process confusing and expensive.
"When I tried to set up my own plan, I was shocked that it was going to cost me $1,000 to $2,000 a year in administrative fees," he says. "It's in the state's interest for people to be saving money for retirement. Why are there so many hurdles in front of the small business owner to set one of these up?"
The state estimates at least 1.5 million workers don't have access to a retirement savings plan on the job, although research has shown people save more through payroll deduction plans.
The idea of small business retirement plans has been raised before in the Statehouse, but until now, the financial service industry opposed it as potential competition, because the state would have managed the program.
Gary Burris, senior policy associate with the Economic Opportunity Institute, says the difference now is the industry has agreed to do it.
"We would be using current companies that offer retirement plans, and having them agree to charge low fees for the workers who are participating," he says. "There would be no fee to the business owner who wants to start the plan at their place of work."
Burris says several other states have passed retirement savings legislation, but Washington's is the only one that will also allow a business to match employees' contributions – up to three percent. The match will be optional.
The Small Business Retirement Marketplace is slated to be online in 2017.
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