A new law in the state of Washington to expand the number of workplace retirement plans adds momentum to state efforts to get more of their citizens to start saving.
On Monday, Washington Gov. Jay Inslee signed a bill that establishes a public website to match businesses with fewer than 100 employees to private-sector retirement plans. The Small Business Retirement Marketplace is managed by the Washington Department of Commerce, but the state will not offer its own retirement plan.
Washington is one of several states where legislation has been introduced or task forces have been launched to address the large portion of the population that does not have access to a retirement plan at work. Earlier this year, Illinois approved a bill that establishes a state-run automatic individual retirement account.
“We feel that there is a crescendo building,” said Hank Kim, executive director and counsel at the National Conference on Public Employee Retirement Systems. “The trend is for more and more states to take a look at state-based retirement initiatives.”
Retirement plan firms must offer a target-date fund or something similar and a balanced fund in order to be included on the Washington website. The program also will involve the so-called MyRA, a starter IRA being developed by the Obama administration.
Signing up for retirement plans from the digital marketplace is optional for Washington small businesses, and joining them is optional for their employees.
The Washington plan has drawn support from the broader financial industry, including the Securities Industry and Financial Markets Association.
“SIFMA applauds Washington’s continued leadership in the retirement space and would encourage other states to consider adopting this workable public-private partnership to effectively expand retirement savings and security in their states as well,” said Marin Gibson, SIFMA managing director, in a statement.
The bipartisan bill also was backed by the American Council of Life Insurers and AARP.