Spokane Journal of Business

State launches online retirement marketplace

Program intends to increase access to savings boost plan

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Since the launch of the Washington Retirement Marketplace last month, the nation’s first state-verified online marketplace for low-cost retirement plans, its director, Carolyn McKinnon, says the program is receiving an encouraging number of calls and website traffic.

The mission of the Retirement Marketplace is to provide retirement plan options to both businesses that don’t offer such plans and individuals that don’t have access to them.

“Employers and individuals seem excited about the opportunity,” says McKinnon, an employee of the Washington state Department of Commerce. “We’re learning how to drive traffic to the site, but it’s a little early to know how many people have found a plan that meets their needs.”

McKinnon says 2 million Washingtonians—who make up about 61 percent of the state’s employed workforce—don’t have access to retirement savings plans through their workplaces. About 131,000 businesses in Washington state don’t offer options for retirement plans.

Looking at the Department of Commerce metro-area breakout, Spokane fares only a bit better than the statewide average, with 50 percent of its workforce having no retirement-plan access through employers.

“Some small businesses say it’s too complex. They say, ‘Make it easier for me to find a lower-cost way to do this for my employees,’” McKinnon asserts, adding that the goal of the Retirement Marketplace is to do just that.

Retirement Marketplace launched with five types of 401(k) plans offered through Bellingham, Wash.-based Saturna Trust Co. with no administrative fees charged to Washington state employers who access the plans from the retirementmarketplace.com website.

The site also lists traditional and Roth individual retirement accounts provided through New York-based Finhabits.

McKinnon says the state will add qualifying plans from other providers in the future.

While participating employers likely will offer automatic payroll deduction options to their employees, individuals who choose plans outside of their employers can opt to schedule automated withdrawals from their checking or savings accounts, McKinnon says.

National research has shown that people who have access to plans with automatic payroll-deduction options are 15 times more likely to save for retirement, McKinnon asserts. 

“The more automated it is, the more likely they are to do it,” she says.

For plan providers, one condition of participation in the Retirement Marketplace is that they can’t charge the employer administrative fees.

McKinnon says that’s a big incentive for employers to look to Retirement Marketplace to comparison shop for plans, because the fee-waiver requirement potentially provides employers with significant cost savings compared to plans offered outside of the marketplace.

For individual enrollees, the plan can’t charge more than 1 percent annually of an account balance for administrative fees. “That’s for all fees, including investment-fund management and record-keeping services,” McKinnon says.

The Retirement Marketplace isn’t just for first-time retirement savers, McKinnon says.

Like with any retirement plan provider, enrollees can roll existing plans into and out of Retirement Marketplace plans.

“Federal law provides portability,” McKinnon says. “Sometimes there’s a one-time rollover fee, which is noted on Retirement Marketplace.”

People within certain income limits also can augment plans they may already have through their employers by setting up an additional IRAs through Retirement Marketplace, McKinnon says.

While McKinnon asserts there’s been widespread interest from people looking at the Retirement Marketplace, she hasn’t heard yet from early adopters of plans listed on the site.

“The Washington state government doesn’t collect any personal information,” she says.

Although the state administers the Retirement Marketplace, employers and individuals who find a plan that meets their needs are referred to enrollment officers who work for private financial services approved by the state to participate in the program.

“The state is providing a simple shopping experience,” McKinnon says.

While anyone can visit the website, Washington state can’t require the providers to offer the plans to residents of other states.

“All visitors are welcome, but the state has no influence on whether plans we provide and carry can be offered to people who reside elsewhere,” she says. “Providers have made fee concessions. We have an agreement that any Washington resident referred though Retirement Marketplace be offered the same plan.”

Looking ahead, however, McKinnon says the program could be expanded to join with other states.

“It can be scaled and customized. It could turn into a consortium of many states,” she says, adding that about 40 states are looking into retirement security.

Retirement Marketplace has a current annual budget of $286,000, which is funded through the state’s operating budget.

“We aspire to have a self-supporting program, although that’s some years off,” McKinnon says.

The program has the equivalent of one full-time employee, she says, adding however, that the work is divided among several Commerce Department employees.

The Commerce Department has contracted with Bellevue-based Redmond Technology Partners LLC to develop, operate, and maintain the Retirement Marketplace website.



Mike McLean
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Deputy Editor Mike McLean has worked his entire journalism career in the Inland Northwest. Mike, who also lives to reel in fish and crank up music, has worked for the Journal since 2006.

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