What is the Washington Small Business Retirement Marketplace?
The Washington State Legislature recently passed the Washington Small Business Retirement Marketplace. It is a market-based approach to make it easier and less expensive for small businesses to offer retirement savings options to their employees.
Employers with fewer than 100 employees, including sole proprietors and self-employed individuals, will have access to a “marketplace” of private retirement plan options for their employees to help them take charge of their financial future.
- Participation in the marketplace is voluntary for employers and employees.
- Accounts are portable. When employees switch jobs, they can take their plans with them.
Washington’s legislation is part of an AARP national initiative called “Work and Save.” The marketplace is set to launch in January 2017.
Why is this important?
Today, a secure retirement is out of reach for millions of Americans, especially those who work for small businesses. A recent AARP Washington survey found that nearly half (44%) of Washington adults ages 18-64 have saved $25,000 or less.
- Less than half of Washington workers participate in a retirement plan at work.
- 1.5 million Washingtonians have no access to retirement savings in the workplace
- About 90,000 Washington small businesses offer NO retirement arrangement.
Lack of savings puts individuals at risk of slipping into poverty when they retire and leads to a greater reliance on state safety net services in the future. People save more when they have a workplace savings option, but many small businesses have been unable to provide retirement plans to their employees due to high costs and administrative burdens. The retirement marketplace will make it easy and inexpensive for small businesses to help employees build their savings.
Why should small businesses participate in the marketplace?
Retirement savings plans benefit the business and the employees:
- 82% of small business owners agree that offering retirement benefits helps recruit good employees.*
- Improved financial security has a positive impact on employee performance.
- Ensuring that employees have adequate retirement savings helps employers manage succession planning.
- 73% of small business owners say they feel a responsibility to provide some kind of retirement benefit.*
- Participating employers and employees can take advantage of federal and state tax credits and benefits designed to encourage saving.
* Data from the National Conference on Public Employee Retirement Systems (NCPERS)
More information is available online from the Washington State Department of Commerce, and AARP. You can also click here to subscribe to email updates from the Department of Commerce on news about the Marketplace launch.
Also check out some of the latest news about the Marketplace: