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Washington and Rhode Island are on different coasts, but both states are working to address the issue of access to retirement plans for private sector workers whose employers do not offer plans.
Washington Governor Jay Inslee last week signed legislation creating a state-facilitated program, Washington Saves, to provide coverage for those private sector employees. The program will launch by January 1, 2027, according to the announcement.
Washington Saves creates an automatic-enrollment individual retirement account program. Enrolled participants will make retirement contributions to an IRA through payroll deduction from their pay, similar to a 401(k) plan.
“Washington Saves will be a cornerstone for wealth building and the long-term financial health for generations of Washingtonians to come,” said Washington State Treasurer Mike Pellicciotti in a statement.
The program will enroll workers at a default contribution rate of between 3% and 7% of wages. A 15-member governing board will design, develop, implement, maintain and oversee Washington Saves.
Additional details include:
- The program uses automatic escalation, restricting yearly contribution rate increases to 1% per year up to 10% of wages;
- Covered Washington employers are businesses located in the state for at least two years where employees work a combined minimum of 10,400 hours during the previous calendar year that do not already offer employees a qualified retirement plan;
- State employers that meet criteria will be required to enroll employees who have had continuous employment for one year or more; and
- Employees may opt out of the program.
The Washington House of Representatives passed the bill authorizing Washington Saves on March 1, and the Washington State Senate followed suite on March 7.
Washington Saves is intended to help 1.2 million workers save for retirement, according to a fact sheet from the Pew Charitable Trusts.
Washington became the 19th U.S. state to enact legislation expanding retirement coverage. State-facilitated retirement savings programs have accumulated more than $1.26 billion in retirement assets, as of the latest data available from the Georgetown University Center for Retirement Initiatives.
Rhode Island Retirement Program
In Rhode Island, the Rhode Island House of Representatives’ finance committee held a hearing March 28 and received testimony on two state bills—H.B. 7127 and S.B 2045—that would create the Rhode Island Secure Choice Retirement Savings Program.
Rhode Island’s retirement program would be structured as an auto-IRA, allowing workers to contribute via payroll deduction but also to opt out or change their contributions at any time. The program would be administered by the by the office of the general treasurer.
More than half of Rhode Island’s private sector workforce (51.2%)—172,000 workers—do not have access to retirement savings through their employer, according to a fact sheet from Pew.
The bill in the Rhode Island House of Representatives is sponsored by State Representative Evan Shanley, who has sponsored similar legislation for the last several years.
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