Yesterday, at the public hearing for HB 2724, the retirement savings bill, Rep. Springer said, “It’s safe to say this is a bold undertaking, but to deal with a looming financial crisis, we must have a bold solution. There are 38 million Americans who retire with no money saved for retirement. Where do we think these Americans will be at age 75 or 80 when they run out of savings? At government’s doorstep needing public assistance.”
HB 2724 would create a voluntary defined contribution retirement account to which employees at small businesses could contribute with the funds invested by the State Investment Pool. Currently, 78% of Washington small businesses do not offer retirement savings plans. When employees do not have access to a retirement savings plan at their workplace, only 5% take the initiative to set up a private IRA.
“I run a small wine shop in Kirkland with four employees,” said Rep. Springer. “I would love to offer them a retirement plan, but I can’t find one.”
Testimony from The Small Business Majority revealed the reason for this is the fact that existing plans are too expensive and the administrative burden too high.
The plan created by HB 2724 would provide employers a voluntary plan with the flexibility to contribute or not to contribute, low set-up costs and low administrative costs. The American Association of Retired Persons (AARP) testified on the bill’s behalf, citing that it is good for businesses too because private brokerage firms could market the product and earn the commissions.
In response concerns about the complicated nature of setting up a retirement account for private citizens, Rep. Springer pressed, “However complicated this might be, it is imperative. We cannot continue with business as usual. We can argue about the setup costs. What we cannot argue is the cost to Washington State when an estimated half million Washingtonians with no retirement savings are at our doorstep. It’s time to get started.”