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General Assembly Eyes 'Work and Save' Retirement Program

The federal government, all states and many local governments offer an array of publicly funded assistance programs for retirees. (QuinceMedia/Pixabay)
The federal government, all states and many local governments offer an array of publicly funded assistance programs for retirees. (QuinceMedia/Pixabay)
January 29, 2019

RICHMOND, Va. — As many people try to recover from the impact of the government shutdown, there is a renewed focus on helping contractors and private-sector workers save for retirement.

On Tuesday, a state House subcommittee is scheduled to hear House Bill 2431, which would establish a board to create a plan for employees of small businesses and private employers to contribute to a retirement plan. A state-ordered feasibility study found such a plan would benefit Virginians since many more workers are in or nearing retirement with insufficient resources to sustain themselves.

David DeBiasi, associate state director with AARP Virginia, said the purpose of the state's "Work and Save" plan is to help people take their futures into their own hands by setting up Individual Retirement Accounts.

"The thing about human behavior is that you know anyone can go out and get an IRA, but people typically don't do it,” DeBiasi said. “So if you offer them, like, a 401(k) at work, they are 15 times more likely to get it."

DeBiasi said 1.2 million Virginians don't have access to a 401(k) program at work. While gaining traction in several states, the plans are opposed by many in the financial-services industry who view them as unfair competition for investment firms and banks.

However, DeBiasi said the program would be completely voluntary, as the state and employers wouldn't be on the hook for any gains or losses, and the state would provide oversight in the public-private partnership.

"The money would be invested by the private industry of financial services, and the state would just help set up the program so the employers could easily offer employees savings through payroll deductions,” he explained.

DeBiasi said other benefits include reducing the administrative and investment costs of small businesses, helping people prepare for retirement, and, according to the feasibility study, reducing the costs of publicly funded assistance programs for retirees. If approved, the bill would require a market and legal analysis of the program before it begins in 2021.

Trimmel Gomes, Public News Service - VA