Virginia is the latest state to move forward with a public retirement plan for private-sector workers, as one chamber of its legislature last week approved a bill to establish VirginiaSaves.
The program would be similar to automatic IRAs used in several states, including those of Oregon, Illinois and California. Virginia’s House of Delegates passed the measure last Tuesday by a vote of 56 to 44, according to a release from Delegate Luke Torian, who sponsored the bill.
The measure has since been introduced in the state Senate, where it was referred to committee. Virginia Gov. Ralph Northam has voiced support for the legislation, according to Torian’s office.
Under the proposed law, the Virginia College Saving Plan board would build and administer the auto-IRA program. The 529 board would be responsible for drawing up guidelines, including default contribution rates for workers and steps for dealing with noncompliance, according to the state legislature’s site.
About 45% of Virginia’s workforce does not have access to an employer-sponsored retirement plan, Torian’s office said in the release.
The proposed Virginia program, like other auto-IRA systems, would require employers with at least five workers to participate unless they already offer their workers a retirement plan. Employees would be able to opt out.
Enrollment in the program would begin by July 1, 2023, at the latest, according to the bill.
Numerous other states have enacted auto-IRA legislation, including Colorado, Connecticut, Maryland and New Jersey, according to Georgetown University’s Center for Retirement Initiatives. Seattle, Wash., has also passed legislation.
The three autos-IRAs programs that are up and running manage a total of about $128 million, Georgetown CRI data show. OregonSaves, which was the first to go live, represented about $84.7 million in nearly 88,000 accounts at the end of 2020. Illinois’ program, the second to launch, had $47 million in 80,000 accounts. And California’s CalSavers program, which last year began phasing in companies with at least 100 workers, represented more than $28 million among 96,000 participants.
So far, about a third of eligible employees have chosen to opt out of those programs, according to Georgetown CRI.
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