Virginia Del. Danny Marshall knows how important it is to encourage employees to save for retirement—he regularly hears from those who didn’t.

“We have a lot of people living on fixed incomes,” Marshall said. “It just puts people in a very tight position” when they do not have any other retirement savings. In 2008, one in four older Virginians’ only source of income was Social Security.

Marshall, R-Danville, is aware of how time-consuming setting up a retirement savings plan can be. He did it for Marshall Concrete, a family business.

“It took almost six months of my life to figure these things out, figure what was best for the company and best for our employees,” he said. “There were a lot of hoops to jump through. We had 180 employees, so it was easier for me to spend time doing this, but if you are a small business and you are one of the guys doing the work, you don’t have time to do this.”

Encouraged by AARP Virginia, Marshall sponsored a bill to help businesses with 50 or fewer employees offer retirement savings plans to their workers without having to start from scratch, as he did. AARP helped put together a broad coalition of business groups that endorsed the plan, which would be modeled after Virginia’s popular college savings plan.

The proposal would allow eligible small-business employees to easily save for retirement by having deductions from their paychecks automatically put into investments offered by a state-endorsed fund. The bill had bipartisan support in both the House and Senate, but it never came up for a vote. Instead, it was referred to the Small Business Commission, a bipartisan group of lawmakers and small-business owners, for input on how best to structure the program.

“The devil is in the details,” Marshall said. He hopes that the commission will finish its work before the next General Assembly session opens in January.

Del. Bill Janis, R-Glen Allen, is a cosponsor of the bill and a member of the commission. He also said the program would save small businesses time and money.

“We want to remove obstacles and create an opportunity for state government to work in partnership with small businesses to create, on a voluntary basis, retirement plans for their employees,” Janis said. “It will give them retirement security, an opportunity to retain capable employees.”

Madge Bush, AARP Virginia associate state director for advocacy, said two important components of the proposal are automatic payroll deductions—“If you don’t see it, you don’t spend it”—and the fact that the program, although state-sponsored, would be voluntary.

“That is very important in Virginia where there is resistance to anything mandatory,” she said.

Increasing retirement savings in Virginia is critical, Bush said. Only about half of small-business workers have access to a payroll retirement plan.

Janis and Marshall say the bill would help small businesses, which account for the lion’s share of jobs in Virginia. Although the state might provide some resources to get the plan started, operating costs would be paid by participants, not taxpayers.

“This isn’t a Republican issue, and it isn’t a Democrat issue. It is about trying to make government part of the solution, not part of the problem,” said Janis.

“The savings issue is just so profound,” Bush said. “We have got to help the future of Virginia and the future of our country, and we have got to help people know they have to save for the future and their retirement.”

Cheryl Arvidson is the executive director of the Fund for Investigative Journalism and a freelance writer living in Falls Church, Va.

Photo Credit: After spending six months setting up a retirement plan for a family business, Virginia Delegate Dan Marshall sponsored a bill that would allow employees of small businesses to participate in retirement savings plans.
Photo courtesy Dan Marshall