A Plan for Saving at Work

By Linda H. Lamb

Evon Kirkland McAngus works hard to keep her customers happy and to attract and keep good employees. Her design business employs just 12 people, but she provides three months of maternity leave at half pay.

“I try to invest in people, spend time building a team,” said Mc­Angus, an interior designer who runs Westend Interiors in West Columbia. “You want people to stay with you.”

That’s one reason she is in favor of a state-sponsored “work and save” program, a top priority this year for AARP South Carolina as it builds support for legislation in 2018. Payroll deductions for a managed retirement account are a painless, efficient way for employees to put money aside, advocates say. But offering such a program is beyond the ability of most small businesses.

“I think it’s a really good thing. Most people are just not inclined to save,” McAngus said. “I know that if this were an option, there would be interest in it.”

Americans overall are not focused on saving for retirement, and almost half of those with private-sector jobs have no retirement plan through work. In South Carolina, about 800,000 residents with such jobs do not have access to a workplace plan.

A large number of retirees without savings or a pension could place a burden on a state where about 10 percent of older adults already live in poverty.

Older South Carolinians work for lower wages than do those in other states, and more of them are unemployed, according to the National Institute on Retirement Security.

“We need to help people be more prepared for retirement so they won’t have to rely on state and federal programs,” said Jim Love, advocacy director for AARP South Carolina.

Seven states have adopted savings plans and about 30 others are considering it. Typically, a work and save program is set up within a state agency but run by a third-party administrator.

Making accounts portable
The program wouldn’t be mandatory. Businesses could opt in. Ideally, work and save accounts would be portable, with employees able to keep their funds even if they change jobs.

“It’s a win-win,” said Joe Bogacz, 74, a Hilton Head retiree who serves on the AARP South Carolina Work and Save Task Force. “It helps employers keep good people, and employees see it as a plus. It also helps the state, because if people aren’t saving, they are more likely to eventually have to rely on government.”

A survey conducted for AARP South Carolina last year found that 82 percent of small-business owners agree that lawmakers should support a retirement savings option. Sixty-four percent of those who do not offer a retirement plan said they would be likely to if a state plan were available, and 78 percent said offering a retirement savings option provides a competitive edge in hiring and keeping employees.

“Most small-business owners can’t offer any sort of retirement program,” said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce. “They might not even have a retirement plan for themselves.”

The state’s involvement is essential, he said, to bolster confidence in the program and provide oversight.

“It just makes a lot of sense, if the goal is to help people put money away,” Knapp said.

For more information on work and save, contact Jim Love at 866-389-5655 toll-free, or go to aarp.org/ppi/state-retirement-plans.

Linda H. Lamb is a writer living in Columbia.