OLYMPIA – Legislation to create automatic retirement savings accounts for millions of Washingtonians was signed today by Governor Jay Inslee. Engrossed Substitute Senate Bill 6069, known as Washington Saves, was requested this year by Treasurer Mike Pellicciotti in partnership with Senator Mark Mullet (D-Issaquah) and Representative Kristine Reeves (D-Federal Way) as a response to the developing crisis of retirement savings.
Washington Saves will establish an automatic Individual Retirement Account (IRA) system available for those Washingtonians without access to employer-based retirement systems. The funds will then be professionally invested on their behalf, providing a portable, automatic retirement savings account to help secure a pathway toward retirement for every Washingtonian. Workers will have the flexibility to determine contribution rates and the ability to opt out at their choosing.
According to the AARP Public Policy Institute in August of 2022, roughly 1.2 million Washingtonians did not have access to an employer based retirement savings plan, which is about 43-percent of Washington’s private sector employees. In addition, according to the National Institute on Retirement Security, two-thirds of Millennials have nothing saved for retirement.
“Washington Saves will be a cornerstone for wealth building and the long-term financial health for generations of Washingtonians to come,” said Pellicciotti. “Creating this accessible and easy to use tool for working Washingtonians to set money aside and aid in securing a dignified retirement marks a turning point for our state as we work to rebuild the economic security promised to previous generations.”
Already, fifteen other states have adopted similar proposals to spur retirement savings as the risks of leaving the issue unaddressed, including future pressure on individual and state budgets, becomes increasingly clear. So far, state-facilitated programs across the country have helped participating workers save over $1 billion toward their retirement. According to modeling by Pew, Washington Saves could help Washingtonians save as much as $2.5 billion in the first seven years of the program. Additionally, Pew reports that workers are fifteen times more likely save for their retirement if they can do so through a payroll deduction.
“We’ve got to make it easier for workers to save for retirement. This bill gives employers a plan they can offer their employees without charging the employer a penny, and it gives employees the ability to have a payroll deduction out of their paycheck that goes directly into a retirement account with low management fees,” said Mullet. “This bill will help workers in Washington be better prepared for retirement.”
In November of 2023, a survey conducted by Pew Charitable Trusts indicated that 72 percent of Washington’s small-business owners support creation of a state-facilitated retirement savings program.
“Working families are struggling to pay for their day-to-day needs, let alone save for retirement. More than half of Washington households lack savings for retirement, leaving our seniors and families financially vulnerable as they approach later life,” said Reeves. “I introduced the Washington Saves program to create more opportunities for workers to save for their retirement and help us fight for a future that includes us all.”
The program is now set to go into effect beginning in 2027. A governing board will be established to further design, implement, maintain, and oversee the program and will include members of the Legislature, the State Treasurer, the Director of Labor and Industries, and a slate of gubernatorial appointees.
On final enactment, the amended bill received a vote of 55-41 in the House of Representatives and 35-12 in the Senate.