NC House lawmakers want to create a new national retirement savings program for workers whose employers don’t provide that benefit.
Rep. Jarrod Lowery of R-Robeson is sponsoring the bill. He pointed out that half of private sector workers (about 2 million in North Carolina) are unable to receive retirement benefits through their jobs.
“Most work in small businesses,” he said at a press conference Wednesday. “We’re talking about the working class in North Carolina. It’s the mechanics, landscapers, line workers, people who really help keep North Carolina running… And what this really means is they’re not ready for the coming retirement years, the golden age. ”
The proposed “North Carolina Work and Save” program would allow workers to accumulate retirement benefits through payroll deductions. This is similar to the 529 University Savings Account Program. Employers who want to match their employees’ retirement benefits should continue to use their existing private 401(k) style options.
A similar bill was introduced in the House of Representatives two years ago, but it did not become law. One reason was that some financial services firms were concerned that state-run savings programs could compete with their own offerings.
Lowry said he doesn’t think it’s something to worry about.Research shows that people are 15 times more likely to save for retirement if they can save through payroll deductions.
“This is really tapping into a market that has nowhere else to go,” he said. “This will be the best option for North Carolinians to take charge of their economic future.”
About 16 other states have similar programs and are supported by AARP. AARP State Director Michael Olender said the program could save states billions of dollars in government-supported programs that seniors would not need if they had adequate retirement savings.
A private company runs the program under the supervision of a state board. The bill is scheduled to undergo its first commission hearings next week.