WASHINGTON—The Pew Charitable Trusts expressed support today for a retirement savings bill in the Washington Legislature, saying the measure would help some 1.2 million private-sector workers secure a stronger financial future.
The Washington Saves Act would establish an automated savings program for workers who lack access to an employer-sponsored savings plan, automatically enrolling them into an individual retirement account (IRA) in which a portion of their wages would be set aside every pay period.
Under the legislation, workers would be able to save either through a standard rate or by customizing their savings to meet their needs. Workers would have full control of their contributions and investments, and they could opt out entirely, at any time. Meanwhile, businesses registered in the program would be able to seamlessly—and at no cost to them—enroll their employees. The program would be a public-private partnership professionally managed by a private financial services firm with oversight by the state.
Fifteen states have passed similar laws, which are variously known as “auto-IRA,” “work and save,” and “secure choice”: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, Oregon, Vermont, and Virginia. Although some of the state programs are still in their infancy, more than 800,000 savers in the seven states with active programs have already amassed over $1 billion in assets since 2017.
John Scott, director of The Pew Charitable Trusts’ retirement savings project, issued the following statement:
“Americans want to build a secure retirement. Yet more than half of private-sector workers in the U.S. work for an employer that’s unable to offer retirement benefits. In Washington, as many as 1.2 million workers—or 43% of the state’s private-sector workforce—are in this category. This lack of access to workplace retirement programs disproportionately affects workers of color, as 47% of Black workers and 66% of Hispanic workers in Washington currently don’t have access to workplace retirement benefits.
“Research shows that workers are 15 times more likely to save for retirement if they can use a payroll deduction. The Washington Saves Act offers workers that opportunity. It’s an innovative and practical solution, with no costs to employers, that will address the savings challenges workers in Washington face in this economy. And the act will also enable small businesses to compete more effectively with larger businesses in recruiting and retaining workers.
“When workers are financially secure, they’re better able to withstand financial shocks and more likely to save for their future. What’s more, they’re less reliant on taxpayer-funded government programs: Our research shows that expanding access to workplace retirement benefits in Washington will save the state’s taxpayers more than $3.9 billion over 20 years.
“The Washington Saves Act is a win for workers, employers, and taxpayers. We urge the Legislature to pass it promptly.”
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The Pew Charitable Trusts uses data to make a difference. Pew addresses the challenges of a changing world by illuminating issues, creating common ground, and advancing ambitious projects that lead to tangible progress. Learn more at www.pewtrusts.org.