Virginia’s General Assembly has approved an amended bill that gives working residents a way to save for retirement, but advocates for retirees are pushing lawmakers to remove those amendments to give the bill a wider reach.
The Virginia Saves program requires private companies to offer employees the option to contribute to an individual retirement account through Virginia529, which operates the state’s college savings plan.
Natalie Snider, associate state director of advocacy for AARP Virginia, said two Senate amendments weaken the plan: One limits eligibility to employees who work 30 or more hours per week, and the other limits the program to businesses with more than 25 employees.
“Taken together, these Senate amendments exclude approximately 400,000 people from being able to participate in this program,” Snider explained. “And that’s fully one third of the people who don’t currently have access to these programs through their employers.”
Lawmakers will reconsider the Act when the General Assembly reconvenes April 7.
Business groups opposed the bill, claiming administering the program would be too difficult and unfair to business owners.
But Snider countered the IRA offering is an easy “plug and play” option for employers who only have to inform employees that the program exists and ensure automatic deductions are entered in their payroll system.
She pointed out opening the plan to all employees regardless of hours worked or how big the business is would be a giant step forward for folks to put away money for the future.
“We want this program to be available to as many employees in Virginia as possible,” Snider asserted. “Saving for retirement is something that everyone should have access to. We should all have some way to save for retirement.”
Snider said about 1.2 million Virginians don’t have any retirement savings.
Without a program such as Virginia Saves, the Pew Charitable Trusts estimates Virginia would spend about $12 billion over 15 years for services such as Medicaid because households aren’t able to save enough for retirement.
Seven states including Maryland, California and Oregon have passed similar automatic IRA programs.
Diane Bernard, Virginia News Connection