Although a bill establishing Voluntary Employee Retirement Accounts failed in the 2014 legislative session, lawmakers are considering a concurrent resolution that would create the program endorsed by the AARP.
VERA would be a state-managed system available for small businesses and employees, according to the text of Senate Concurrent Resolution 91. The plan would allow employees to voluntarily contribute a portion of their paychecks toward retirement, and employers would be under no obligation to match funds or participate in the program in any way. Supporters of the program say it serves as a way for workers who aren’t offered retirement plans through their jobs a way to save for their futures.
“VERA embodies the kind of values we want to see in our state, ones I want to see for my 11-year-old daughter attending public schools,” said David John, senior strategic policy adviser for AARP. “It enables people to save some of their own money to build their own future to depend on themselves.”
AARP statistics show nearly half of all workers in West Virginia do not have access to an employer-based retirement plan, such as a 401(k). Small businesses can offer those types of plans, as well as six other ways to help employees save, but they’re often cost-prohibitive.
“If we look at two of them, they’re 401(k)-type policies,” he said. “401(k)-type policies for smaller businesses are much more expensive than for a large business.”
But opponents of the plan argue workers have many options when it comes to saving for retirement. They say the voluntary account system is unnecessary.
“The establishment of a government-managed retirement savings program is a classic case of a solution in search of a problem,” said John Pauley of the National Association of Insurance and Financial Advisors. “The proposed VERA program is simply not needed. A variety of qualified and non-qualified retirement programs already exist in the private sector.”
Mary Jane Pickens, an attorney with Spillman, Thomas and Battle, said a much more formal opposition coalition has formed since the Legislature rejected the bill earlier this year. Members include the Business and Industry Council, West Virginia Chamber of Commerce and the West Virginia Bankers Association, among others. Pickens said although many states have passed legislation allowing voluntary retirement account-type programs, they haven’t been fully implemented. That makes it difficult to judge their effectiveness.
“These are novel programs,” she said. “No state has implemented it. These type of programs have not had the opportunity for judicial review or judicial scrutiny. It is unclear to us why West Virginia would want to be a legal testing ground for something like that.”
Although there’s no precedent, 75 percent of small businesses across the country say they would support something like the voluntary retirement accounts. Sarah Mysiewicz Gill, senior legislative representative for AARP, said 70 percent of the organization’s members and political leaders in both parties also like the concept.
“It speaks to the heart of what we’re doing with VERA,” she said.
Navigating through retirement plans and options can be burdensome for small business owners, especially because there is not a one-size-fits-all retirement solution.
“Let’s be honest, a small business … is trying to wade through the retirement industry and figure out what’s bets for their three or four employees,” she said. “There may be options available but they may not fit. The reason we know that currently is because three out of four businesses don’t offer a plan. But eight out of ten want to, they just think the current environment is too costly. VERA is an answer to that.”
Contact writer Whitney Burdette at 304-348-7939 or firstname.lastname@example.org. Follow her at www.Twitter.com/wburdette_DM.