Despite the economic toll COVID-19 has taken on small businesses across the nation, state-sponsored retirement plans have remained resilient with employee contributions holding steady, withdrawals under control and employer registrations inching higher, however slowly.
"We are still growing," said Courtney Eccles, the Chicago-based director of the Illinois Secure Choice retirement savings program. "We're seeing the number of employers who are registering continue to increase. We're seeing the number of savers who've been added continue to grow."
The state-sponsored plans, which are usually structured as Roth individual retirement accounts, typically require private-sector employers that do not offer workplace retirement plans to do so through the state-provided programs.
At Janico Building Services, a North Highlands, Calif.-based janitorial services company enrolled in California's CalSavers retirement program, employees stayed the course, said Lorenzo Harris, the owner of the business.
The company's 45 employees continued to contribute 5% of their semimonthly gross pay to the state-run retirement plan, the same as they did before the outbreak of the coronavirus. In addition, employee participation in the plan also remained stable at roughly 70%, Mr. Harris said.
The company did not have to lay off any of its workers as clients cutting back on office cleaning services were offset by those demanding more. "We made an effort to make sure that our employees were safe and reassured them that their jobs were safe as well," Mr. Harris said, adding the job security was likely a major reason why employees did not stray from their normal savings behavior.
While many companies did not fare as well economically as Janico, the overall impact of the pandemic on state retirement plans nevertheless appears to have been restrained, according to interviews with state program leaders.
Indeed, in California, Illinois and Oregon — the three states with the longest-running state-sponsored programs — employee contributions held steady or inched up slightly higher. Meanwhile, employee withdrawals, which many dreaded would be severe, weren't nearly as serious as feared. Pro- gram executives posited that the muted impact may have been tied to the stimulus checks and enhanced unemployment benefits that were part of the federal government's fiscal stimulus package, as well as possibly the newness of the state plans.