northern regional policy workshop & community trainings gaston caperton center, fairmont state...
TRANSCRIPT
![Page 1: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/1.jpg)
STEMMING THE RETIREMENT CRISIS: WV Voluntary Employment Retirement AccountsNorthern Regional Policy Workshop & Community TrainingsGaston Caperton Center, Fairmont State University - July 22, 2014
TED BOETTNERSEAN O’LEARYANGELA VANCE
![Page 2: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/2.jpg)
OVERVIEW
• The Retirement Problem – Retirement Income Deficit - $6.6 trillion– 38.3 million working-age households (45%) have no
retirement account assets– 4 out of 5 working households have saved less than 1
year of income for retirement– The median retirement savings balance for households
nearing retirement is only $12,000– Leading causes of poverty among elderly – Lack of retirement assets a potential drain on future
budgets
![Page 3: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/3.jpg)
Why aren’t workers saving for retirement?
• Most workers lack access to workplace retirement plans.
• Only 43% of WV’s private sector workforce is included in a workplace retirement plan
Employer
does
not of-fer a
plan47%
Employee is not included in plan
10%
Employee is in-
cluded
in a workplace
plan43%
Participation in workplace retirement plans (2011-2013)
Source: WVCBP analysis of 2011-2013 American Community Survey data (3-year average). Universe: private sector workers in West Virginia
![Page 4: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/4.jpg)
Low-wage workers are less likely to have workplace retirement plans
Less than $25,000
$25,000 - $49,999
$50,000 - $74,999
$75,000 - $99,999
$100,000+
18%
52%
67% 70%76%
Share of WV workers included in a workplace retirement plan, by annual income (2011-2013)
Source: WVCBP analysis of 2011-2013 American Community Survey data (3-year average). Universe: private sector workers in West Virginia
![Page 5: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/5.jpg)
Small businesses are less likely to have workplace retirement plans
Under 10 10 to 49 50 to 99 100 to 499 500 to 999 1000+
19%
31%
41%
49%55% 56%
Share of WV workers included in a workplace retirement plan, by firm size (2011-2013)
Source: WVCBP analysis of 2011-2013 American Community Survey data (3-year average). Universe: private sector workers in West Virginia
![Page 6: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/6.jpg)
Young workers are less likely to have workplace retirement plans
25-29 30-39 40-49 50-59 60-64
37%
46%49%
54% 54%
Share of WV workers included in a workplace retirement plan, by age (2011-2013)
Source: WVCBP analysis of 2011-2013 American Community Survey data (3-year average). Universe: private sector workers in West Virginia
![Page 7: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/7.jpg)
West Virginia’s retirees rely heavily on social security
Less than $15,000
$15,000 - $19,999
$20,000 - $29,999
$30,000 - $39,999
$40,000+
89%83%
62%
38%
17%
Social Security as a share of total income for WV seniors, by annual income (2011-2013)
Source: WVCBP analysis of 2011-2013 American Community Survey data (3-year average). Universe: population aged 65+ in West Virginia
Social Security makes up 44% of average senior income in WV, with an average monthly benefit of $1,300.
![Page 8: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/8.jpg)
Roadblocks to retirement security
• Access to a workplace plan is second only to having a job as the most important factor in building retirement security.
• But with 350,000 workers in WV without a plan, the current system isn’t working.
![Page 9: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/9.jpg)
Roadblocks to retirement security
• Small businesses are charged much higher administrative costs than large employers.
• Administrative costs for employers with fewer than 50 participants average 0.43% of plan assets, compared to 0.22% for larger employers.
• Small employers are also more likely to face higher investment fees.
![Page 10: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/10.jpg)
Roadblocks to retirement security
• Small balance accounts are less profitable, and therefore less marketed and pursued by providers.
• Tax incentives designed to encourage saving favor workers with higher incomes.
• Consumers often face multiple, confusing options, making it difficult to make an informed decision
![Page 11: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/11.jpg)
Expanding access to retirement savings through VERA
• A state sponsored system of Voluntary Retirement Accounts could make it easier for workers to save for retirement, and for businesses to offer benefits.
• Legislation introduced in 2014 would have established a VERA program in West Virginia.
![Page 12: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/12.jpg)
Benefits of VERA
• WV, through the Treasurer’s Office, would provide a selection of low-cost investment options.
• The state would also serve as a resource in assisting in enrollment, contributions rules, and investment performance.
• The state’s role in VERA would be similar to its current role in the Smart 529 program.
![Page 13: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/13.jpg)
Benefits of VERA
• By pooling participants, the state can use its leverage to offer affordable, low-cost plans.
• VERA can be run at no costs to the taxpayers, with start-up costs recouped from fees.
• The state would also not be responsible for investment gains or losses.
![Page 14: Northern Regional Policy Workshop & Community Trainings Gaston Caperton Center, Fairmont State University - July 22, 2014 TED BOETTNER SEAN O’LEARY ANGELA](https://reader035.vdocuments.net/reader035/viewer/2022070307/551b7548550346a6148b516d/html5/thumbnails/14.jpg)
Conclusion
• Thousands of West Virginia’s workers aren’t saving for retirement.
• Most workers lack access to easy and affordable retirement plans.
• VERA offers a practical way to meet an unfulfilled need in the market, ensuring that all workers in West Virginia have access to affordable retirement savings options.