The movement to adopt state auto-IRAs has taken another step forward with new legislation in Washington to address the retirement savings gap for millions of its residents.
Gov. Jay Inslee last week signed a landmark law to introduce automatic individual retirement accounts for individuals whose lacking employer-sponsored retirement plans.
Senate Bill 6069, named Washington Saves, was propelled forward by state treasurer Mike Pellicciotti, along with Sen. Mark Mullet and Rep. Kristine Reeves, to mitigate the emerging retirement savings crisis.
"Washington Saves will be a cornerstone for wealth building and the long-term financial health for generations of Washingtonians to come," Pellicciotti said in a statement, emphasizing the program's role in reinforcing economic security and dignity in retirement.
Washington Saves aims to provide a straightforward and accessible retirement savings mechanism for workers, who can adjust their contribution rates and opt out if desired.
This move is especially pivotal as a 2022 note from the AARP Public Policy Institute showed that around 1.2 million workers in Washington, approximately 43 percent of the state's private sector workforce, do not have access to company-based retirement plans.
The legislation responds to a clamor from the business community, with a Pew Charitable Trusts survey showing 72 percent of small-business owners in Washington favored the state-facilitated retirement savings program. This reflects a growing recognition of the need for more accessible savings options for retirement.
"This bill gives employers a plan they can offer their employees without charging the employer a penny," Mullet said, highlighting the importance of auto-deduction programs that put part of employees’ paychecks into low-fee retirement accounts.
Reeves highlighted the new program as a boon for “working families [who] are struggling to pay for their day-to-day needs, let alone save for retirement."
The Washington Saves initiative is slated to be implemented in 2027 and will be overseen by a governing board that includes legislators, the state treasurer, the state director of labor and industries, and gubernatorial appointees.
Efforts to address workers’ retirement savings gaps are also underway in Michigan, where House Bill 5461, sponsored by Democratic state Rep. Mike McFall, seeks to establish an auto-IRA for the state.
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