Advocacy in action blog

Virginia House Bill 2174 would establish the VirginiaSaves Program, a state-run automatic enrollment payroll deduction IRA savings program. The program would be optional for employees, but would require employers with five or more employees that do not offer retirement plans to set up a payroll deduction and retirement savings plan through the state-run system.

Elizabeth Pate, a NAIFA-VA Board member and Past President for the state chapter, testified via Zoom before the Virginia House of Delegates Appropriations Compensation and General Government Subcommittee that NAIFA-VA has concerns about the proposed program.

Pate said that NAIFA applauds efforts by the Virginia General Assembly to help Virginians prepare for retirement, but cannot support the legislation as it currently stands. She noted that the federal SECURE Act makes it easier for employers to band together and offer retirement plans in a cost-effective manner. This achieves the goal of encouraging greater retirement preparation by employees without creating a state-run plan to compete with the private sector.

Plans created under the SECURE Act, she noted, would give participants protections afforded by the Employee Retirement Income Security Act of 1974 (ERISA), while it appears VirginiaSaves participants would not benefit from ERISA protections.

Pate also noted that enrollees in the state-run program would lack access to personalized advice from financial professionals that many participants in private-market plans receive.

Several members of the Subcommittee raised questions about potential financial impacts of the VirginiaSaves plan on small businesses and expressed concerns about the mandatory nature of employer participation under the current draft of the legislation. The Subcommittee vote to send HB 2174 to the full committee for further consideration.

NAIFA and NAIFA-VA will remain politically active and engaged on the proposed legislation.

Michigan and Arkansas have become states number four and five to adopt a best interest annuity rule based on the National Association of Insurance Commissioners’ (NAIC’s) revised Suitability in Annuity Transactions Model Regulation.