Washington state could set up a government-sponsored retirement savings plan to private-sector workers.
State lawmakers are considering S.B. 5740, a bill that would create a Secure Choice Retirement Savings program.
S.B. 5740 was introduced in January. The state Senate passed it by a 31-17 vote March 8.
The House Committee on Consumer Protection and Business held a public hearing on the bill last week. The committee has scheduled an executive session on the bill for Tuesday.
More than 20 states have discussed the possibility of sponsoring a state-run retirement plan for workers without access to an employer-sponsored retirement plan.
Oregon has already set up a state-sponsored retirement program, and California is preparing to do so. Organizers say the programs will boost the retirement savings of workers who don’t have access to an employer-sponsored 401(k) plan or other employer-sponsored retirement plan.
Some financial services groups, such as the National Association of Insurance and Financial Advisors (NAIFA), oppose the public retirement programs. Those groups say that state-run plans are costly, and the consumers without employer-sponsored retirement plans would be better off investing in private-market savings options, rather than contributing the government-run programs.
What Oregon Did
Oregon launched OregonSaves in 2017.
The program, which enrolls workers automatically in individual retirement accounts, has signed up roughly 1,800 employers.
As of December 2018, the auto-IRA program had collected about 22,000 individual employee contributions, for a total of about $10 million, from about 600 employers, according to the Center for Retirement Research at Boston College.
Employees in Oregon can opt out of the program. Employees that opt in automatically direct 5% of their pay into the retirement savings plan. That percentage is set to increase by 1 percentage point each year, until the employee’s contribution rate hits 10%.
What California Is Doing
California is running a CalSavers pilot project now and says it will launch the program statewide July 1.