A Plan to Boost Saving at Work

By Michelle Crouch

Rob Cooley knows that keeping his 40 employees happy is crucial to the long-term success of his business, two Apple Annie’s Bake Shops in Wilmington. But it’s tough for small-business owners to offer the same benefits as larger companies, he said, especially when it comes to retirement.

“Setting up some kind of retirement plan is just cost prohibitive,” said Cooley, 49, who is also a co-owner of a beer and wine store with his family. “Small businesses are getting squeezed at every level: taxes, raw materials, leasing. A lot of us are worried about how to make payroll next week, let alone how to offer extra benefits.”

That’s why he supports AARP North Carolina’s top legislative priority this year: creation of a state-sponsored “work and save” retirement plan. Similar to those in at least seven states, it would allow workers without access to an employer-sponsored plan to save for retirement through payroll deduction.

The plan would be portable so people who change jobs could continue to save.

"I’d love to be able to do this for my employees,” Cooley said. “Having the ability to participate in a state-sponsored, pretax retirement plan is an important step to ensure our incredible employees are able to save for the long term.

About 1.7 million workers in North Carolina do not have access to a 401(k) or a pension through their job. “Work and save legislation would close that gap by allowing people to save on their own, straight from their paychecks, creating wealthier state residents who are more confident in their financial future,” said Doug Dickerson, AARP North Carolina director.

Such a plan would encourage private savings so older residents would not have to rely so much on Social Security. The average monthly Social Security benefit in North Carolina is about $1,240.

Building support
In a recent AARP poll of North Carolina voters 45 and older, more than half said they were worried they were not saving enough to cover their basic needs in retirement. The survey found strong support (77 percent) for the state to create a professionally managed savings plan.

The proposal has been gaining support from state business owners, trade associations and legislators, Dickerson said. The North Carolina Chamber has not taken a position, opting to wait until legislation is introduced to review the details.

In some states, business groups have been skeptical of state-facilitated savings plans, especially if they are not optional.

AARP has several other priorities for the General Assembly session that begins Jan. 11, including creation of a fraud protection coordinator role. A growing number of older residents are being victimized by fraud, and agencies haven’t been able to keep up, Dickerson said.

Part of the problem is that many state agencies are involved. “There are 18 major departments that say they fight fraud, yet the state has no comprehensive strategy or plan in place,” Dickerson said. “It’s not working, and more and more people are being victimized.”

AARP also plans to closely monitor legislation to ensure that the interests of older adults are protected. In 2015, a bill originally focused on preventing whistle-blowing in the agriculture industry was broadened, before it became law, to include any industry. That meant employees who reveal unethical practices at nursing homes, veterans care facilities and hospitals are no longer protected, Dickerson said.

To receive legislative alerts on issues, go to action.aarp.org and select North Carolina. If you are interested in helping lobby on issues, contact Charmaine Fuller Cooper at cfcooper@aarp.org.

Michelle Crouch is a writer living in Charlotte.