Georgia legislators have proposed a bill that would establish Peach State Saves, a defined contribution retirement program available to private sector employees without access to employer-sponsored plans. 

Under the bill, a covered employer that does not offer a retirement plan would be required to automatically enroll employees in a payroll deduction individual retirement account run by the state, unless an employee chooses to opt out of the program.   

A covered employer is defined in the bill as “any person, partnership, limited liability company, corporation, or other entity engaged in a business, industry, profession, trade, or other enterprise in the state, including a nonprofit entity” that has been in business for at least a year and has at least five covered employees. A covered employee refers to someone who is at least 18 years old, is employed by a covered employer, and whose wages or other compensation is taxable by the state.

Employees would be enrolled in a Roth IRA at an automatic contribution rate of 5% of wages. The program would also allow for voluntary contributions by self-employed workers and independent contractors through payroll deduction.

The bill also stipulates that if a participant in the plan is no longer a covered employee, they will still continue to accrue earnings and that a participant’s account balance will always be 100% vested and nonforfeitable.

The American Association of Retired Persons’ Georgia chapter is urging the state legislature to pass the bill. According to AARP Georgia, nearly 1.7 million employees in the state with annual earnings of $50,000 or less do not have access to an employer-provided retirement plan, and another 375,000 employees earning more than $50,000 per year also do not have access to a workplace plan. 

According to AARP Georgia, Americans are 15 times more likely to save for retirement if they have the option to do so at work and 20 times more likely to save if they are automatically enrolled in a workplace savings option.

“The Georgia Peach State Saves Plan provides a way for Georgians to save on the job while reducing their reliance on taxpayer-funded programs later in life,” AARP Georgia stated, citing an AARP study that estimated the U.S. could save $33 billion between 2018 and 2032 through retirement savings and increased retirement income. It also stated that doing nothing will increase state government costs by more than $8 billion over the next 19 years.