SIFMA Commends Signing of WA State Retirement Savings Bill into Law to Help Small Business Employees Save for Retirement

Release Date: May 18, 2015
Contact: Carol Danko, 202-962-7390, [email protected]

SIFMA Commends Signing of WA State Retirement Savings Bill into Law to Help Small Business Employees Save for Retirement

Washington, DC, May 18, 2015 – SIFMA applauds Washington State for enacting the Washington Small Business Retirement Marketplace (SB 5826), which was signed into law today by Governor Jay Inslee. The bipartisan bill sponsored by Sen. Mark Mullet (D-Issaquah) and Rep. Larry Springer (D-Kirkland) will provide thousands of small business employees access to retirement plans by creating a voluntary “marketplace” program and establishing a public website that will connect small business employers to existing private-sector retirement plan vendors.

“Washington State’s enactment of the Washington Small Business Retirement Marketplace is a testament to the State’s desire to effectively and efficiently close the retirement savings gap, while steadfastly refusing to compromise investor protections. Small businesses often don’t have the information and resources available to find the right retirement savings plan for their employees, and this program will provide easy access to low cost, low fee options that are fully portable and provide the same investor protections available to private investors. SIFMA applauds Washington’s continued leadership in the retirement space and would encourage other states to consider adopting this workable public-private partnership to effectively expand retirement savings and security in their States as well,” said Marin Gibson, SIFMA managing director.

Currently, 75.5% of workers employed by businesses with fewer than 100 employees do not have a pension or retirement plan, according to EBRI. A recent AARP survey found that approximately 462,000 Washingtonians between ages 45-64 have less than $25,000 in savings. This program, utilizing the new federal MyRA as its cornerstone, will directly address the primary causes of under-enrollment for small business employees and grow residents’ savings rate.

The Small Business Retirement Marketplace program will be run by the Washington State Department of Commerce. It will establish a digital marketplace to match employers with 100 or less employees with private sector plans. There is no risk to the state, as the state does not directly provide a plan; the State will work with a private sector firm to develop the marketplace and establish protocols for selecting appropriate vendors.

To be eligible to participate, firms must offer a target date or similar fund with asset allocations and maturities designed for an expected date of retirement, as well as a balanced fund, and the MyRA will be a key component of the program.

The plan is completely voluntary, as small business employers will have the choice to offer marketplace plans to employees and employees may choose whether they want to participate. Employees may also roll over plans into an IRA or other retirement account. Government employees are not eligible for participation, as it is for private sector employees only. The Small Business Marketplace will be established in 2017.

The bill was supported by the American Council of Life Insurers, AARP, the Washington Bankers Association, SIFMA, and employer groups.