Retirement marketplace ready to serve small businesses

Hoping to address economic insecurity, the state Dept. of Commerce launches its newest effort next month

Conference Focus

AARP estimates that 44 percent of Washington residents between the ages of 18 and 64 have less than $25,000 in savings, leaving them vulnerable as they move toward retirement. In fact, according to the National Council on Aging, over 25 million Americans over the age of 60 are considered “economically insecure,” meaning they live at or below 250 percent of the federal poverty level. States around the country are taking steps to ensure that tomorrow’s seniors will not face similar hardship.

In Washington, the latest piece of the puzzle addressing economic insecurity among those of a retirement age is the Washington Small Business Retirement Marketplace, set to launch next month.

Carolyn McKinnon, director for the Small Business Retirement Marketplace at the Department of Commerce, explained that the new marketplace model comes from a years-long effort to build consensus in the state legislation. Ultimately, the approach is “a public-private partnership where the Washington State Legislature established some guidelines and priorities for how we can establish a portal for small businesses and individuals to comparison shop for low-cost and hopefully easy-to-use retirement savings plans.”

McKinnon said that Washington is one of only two states (the other is New Jersey) implementing an optional marketplace model and will be the first to see the strategy to fruition.

The marketplace legislation specifically targets the 90,000 small businesses in Washington with fewer than 100 employees who currently do not offer any kind of retirement savings benefits to employees. If all 90,000 were to offer plans through the marketplace, an estimated 1.5 million workers could have access to retirement savings plans they otherwise would not be able to get.

According to McKinnon, bill sponsor Senator Mark Mullet of Issaquah and other collaborators chose to focus on small businesses for this legislation because, “it’s especially hard for small businesses to provide employee benefits.”

While this effort is not expected to significantly impact the complicated enrollment process, officials believe it will help small businesses find the right package for their employees without needing to spend a lot of resources on research.

McKinnon explained that buying retirement benefits is really a two-step process.

“One [step] is shopping and they (business owners) can use the retirement marketplace as their shopping center,” she said. “The second step is enrollment and that’s probably the more involved process where they’re going to need to have their payroll information and so forth on hand.”

Combating economic instability among seniors is not an issue that can be solved with one strategy. Federal agencies like the IRS are working to ensure that employees can save through tax-advantaged accounts and start putting money away early. The Social Security Administration regularly works with federal legislators to maintain a balance that ensures seniors will have access to the funds they paid into throughout their working lives for as long as necessary. These efforts in conjunction with state efforts to increase employee participation in retirement savings plans promise a brighter future for retirees in the future, officials said.

“If workers retire into poverty, then state taxpayers are going to have to step up, so this is an ounce of preventative medicine,” McKinnon added.

Evidence shows that efforts like the retirement marketplace are crucial to combating economic instability among seniors. The AARP, which is a partner for Washington’s marketplace legislation and a major supporter of other employer-participation efforts in state legislations around the country, estimates that people who can save through workplace retirement benefits are 15 times more likely to save, according to McKinnon.

While officials said there is clear need for multi-level efforts to combat economic insecurity among seniors, getting small businesses on board remains a challenge. That is why Mullet and the legislation’s other sponsors made sure that the marketplace would not only be easy to use for businesses, but economically accessible as well.

According to AARP, participating businesses may be eligible for federal and state tax credits. Additionally, McKinnon pointed to several options that do not require employers contribute to their employee’s savings plans – even if those plans are available through their workplace.

Statistics show that businesses who offer retirement benefits can expect to have an easier time attracting and retaining quality employees. This should be especially true in the coming year, McKinnon said, as Oregon has similar legislation taking effect in July that will require all employers to offer retirement benefits to staff, creating a more competitive hiring environment in the Portland-Vancouver area. The small business retirement marketplace is expected to make it easier for employers in Washington to remain competitive with other, similar businesses as they strive to offer competitive incentives to current and future employees.

The marketplace launches in late January 2017. For more information on the launch, visit