Friday, April 3, 2015

Women and a secure retirement: Small businesses need savings plan options

"I see success as bringing some confidence back to the American people that despite our differences, we can find some way to move forward," - U.S. Sen. Patty Murray. (D-Wash.).

In Washington state where I live, a recent survey showed that approximately 462,000 residents ages 45-64 have less than $25,000 in savings. The survey also reported that the average monthly Social Security benefit for Washingtonians is $1,300. That’s $15,600 a year…not enough to live on.
U.S. Sen. Patty Murray (D-Wash.) brought up these statistics in her talk at a recent White House Conference on Aging in Seattle. She also mentioned that 1.1 million residents in our state do not have access to retirement savings plans at work.
This led her to the point that women -- especially women -- “face systemic challenges” in planning a secure retirement. One in 10 older women are living in poverty. (2.9 million) women 65 and older).
This is the same statistic that I began writing about seven years ago when I was still working at the newspaper. In the years since, as more baby boomers age into their 60s, women and retirement has become a much discussed topic, along with equal pay for equal work, the minimum wage and paid sick leave. All of these workplace issues contribute to the fact that a higher percentage of older single women live in poverty than do single men.
To her credit, Sen. Murray, the ranking member of the Senate Health, Education, Labor and Pensions Committee, has repeatedly called for reforms and programs that would address this situation.
Her Healthy Families Act proposed in the Senate would for instance allow workers in businesses with at least 15 employees to earn up to 56 hours or seven days of job-protected paid sick leave each year. She’s also is promoting reauthorization of the Older Americans Act that would increase funding for Meals on Wheels, adult protection and caregiver support programs.
All these proposals are caught up in the over-arching discussion in the other Washington of how we pay for them. I get that. But in terms of poverty and women, the tsunami is hitting the shore. From my perspective, there’s been a lot of talk and political posturing but little has changed. Women have fewer opportunities to save for retirement and many aren’t.
New idea in Washington state
In Washington, a few legislators in the House of Representatives have come up with a new idea that might trigger more retirement savings by women. They call it the Washington Small Business Retirement Marketplace bill (HB 2109, SB 5826).  Here’s how it would work, according to an outline from the Seattle-based Economic Opportunity Institute.
The state will identify financial services firms willing to offer retirement plans and investments. The state would publish performance data on these plans and investments. The state would enforce agreements, including no cost for a business to participate and employee fees would be no greater than 1 percent of their account balance. The state will establish a Marketplace Web site for employers to learn about the firms and their products.
Financial services firms will offer retirement plans to employers with several basic investment options. The firms will manage the accounts and work with the businesses to complete reporting requirements.
Employers who participate may choose whether to offer any matching contribution to the employee retirement savings accounts.
The plans would be portable, voluntary and no risk to the state. In other words they would work just like 401(k) plans offered by larger employers.
Here’s why this is a good idea. In Washington, alone, some 1.1 million people DO NOT have access to a retirement plan, and 77.4 percent of workers employed by businesses with fewer than 100 employees lack access to one.
That’s not surprising since these plans require quarterly reporting, paper work and management. Small business owners are hassled enough.
So a state-sponsored “retirement fund marketplace” seems like a possible way to at least get at this issue. People who have a retirement plan at work are much more likely to use it than not. Any plan like this must come with some sort of education workshop or presentation that addresses women and financial literacy issues. Let's face it, we don't learn this stuff in high school.
Another factoid: More than 38 million Americans in working-age households do not own any retirement account assets, whether in a pension plan, an employer-sponsored 401(k) or an Individual Retirement Account. (click here)
The Institute calls the marketplace proposal “a commonsense approach.”
This is the first “new” idea that I’ve run across in my reporting on women and financial literacy and retirement planning. Of course, there already are critics. Andrew Remo, writing for the National Tax-deferred Savings Association, says small business owners in Washington can already create retirement savings plans, if they choose. This, he says, is needless government meddling. What he overlooks is the paperwork and hassle involved.
In her talk, Murray pointed out that the bills in the Washington House and Senate are bi-partisan. Lead sponsor is Washington state Rep. Larry Springer (D-Kirkland). Bipartisan means broader support. There might be a chance of passage. Let’s hope so.

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