Enroll, Educate, Equip, Empower: Peter Thompson on RetirePath Virginia

With a civilian labor force of 4.5 million, Virginia leaders had a lot to think about when they realized a good chunk of those folks didn’t have workplace access to retirement savings. That’s all changing. We talk today with program director Peter Thompson about the present, the future, and what he’s seeing in this new space. Get to know Peter better here.

Peter, it's terrific to be here with you this afternoon talking about Virginia’s very new RetirePath program.

Yes - RetirePath opened less than three months ago -- in late June. It is the seventh state Auto IRA program to launch, and the first in the South. We're happy to have joined the other Auto IRA states of Oregon, Illinois, California, Connecticut, Maryland, and Colorado.

The program is mandatory for certain private-sector Virginia businesses that have at least 25 eligible employees. Eligible employers have been in business at least two years, and don’t already offer a qualified retirement plan. Eligible employees must be 18 years of age or older, have Virginia income, and work at least 30 hours a week, which is a unique nuance to Virginia’s program.  We thought it was very important to also make RetirePath available to self-employed individuals and gig workers from day one, and it is. 

RetirePath is brand new. Any good news you can share about what you're seeing so far?

You're right, it's still early. But we're pleased with what we're seeing. Our early registration deadline was Monday, September 18. It's hard to believe that the first 90 days have passed so quickly. Our communications encourage eligible employers to enroll ahead of next year’s deadlines. We want to keep the momentum going and to stay in front of employers. 

That said, there are two data points that we are paying very close attention to. One: the number of employers that are actively submitting payroll, and two: the number of employees with Know Your Customer (KYC) failures, which occur when you don't have enough information to automatically establish an account for a saver. 

At present we have the bandwidth and the resources to test new ways of engaging employers and creating nudges that help to drive compliance faster.  It’s still early, but we're currently seeing almost half of our registered employers actively submitting payroll. Most programs run at about a one-third rate during launch, so that's awesome. We would of course like to see an even higher number, but we think that's a good start.

Well done. You've also got a rich set of tools on your site. We imagine you spent extra time diving into what was needed by your employer and employee audiences.

We did and, I'll pause here because I honestly can't say enough about just how robust an infrastructure Virginia529 has. It existed around the Commonwealth’s education savings and disability savings programs well before the addition of RetirePath. The effort to establish the retirement savings program has been a collaborative endeavor across the entire organization, and the marketing team has and will continue to play a key role in how the program is communicated and presented to employers, savers and stakeholders.

One of the things that we wanted to make sure we did with RetirePath was to see that Virginia529 brand consistency carried through. Our marketing team has done an amazing job, bringing the expertise and knowledge they've applied across other programs to RetirePath. It was clear from the start that they were up to the challenge of developing and communicating a new program.

Some examples of that include the employer eligibility quiz and a wealth of other resources that we've made available to employers, savers and community partners.

One of the questions that comes up in the state Auto IRA space is Which agency should house this program. By state, different agencies run public facing savings programs. Does it matter?

You're spot on, it does. The 2020 Virginia529 Report on State-Facilitated Private Retirement Plan Programs closely considered the agencies that were positioned to establish a program in our state. Virginia Retirement System (VRS) was among those organizations, as well as Virginia529, Treasury, and our Employment Commission. Ultimately, Virginia529 was selected. For more than 25 years, Virginia529 has earned an excellent reputation and a level of trust helping families plan and save for the future. And in our leadership with CEO Mary Morris, you have someone who is very passionate about, and a champion for, advancing financial security.

Those, among other factors, led to the General Assembly to direct Virginia529 to establish RetirePath.

Turning in new directions, what future do you hope to see with your program?

RetirePath expands on the agency's mission. We now offer a portfolio of education, disability, and retirement savings programs, designed and intended to help all Virginians achieve their financial goals.

I think that expanded mission gives us an opportunity to be more holistic in how we identify and create solutions to close the savings gap and help foster a lifetime of financial well-being. With that, I think one of the things you'll see is a keener focus on financial wellness and financial literacy. I appreciate that at this organization everyone from the top down is committed to making a difference and having a positive impact on people's lives.

We also know RetirePath is an outlier in terms of its employer eligibility threshold of 25 employees or more, and in its requirement of 30 hours worked. That excludes a lot of workers in Virginia. In time, we’d like to revisit both of these provisions. We’ve got an election cycle coming up where all seats will be open. We expect a fresh set of legislators, and along with that will come the need to engage, educate, and advocate.

Finally, across all of the state Auto IRA programs, I would like to see more direct engagement with participants. I think it's important that employees and individuals have a better understanding about the programs and the facts they need to make more informed decisions. I'm hopeful that the program states, the program administrators, and industry stakeholders, can really put our heads together and think through how we more effectively engage participants and provide solutions and information that helps them save for their futures.

We’ve read that folks who are automatically enrolled and don't really engage also have lower levels of financial knowledge. They’re saving, but perhaps not fully experiencing.

Well, the good thing and not so good thing about auto enrollment is that you’re auto enrolled.

That’s one of the reasons we’re thinking hard about participant engagement and creative ways to break through.

We love the idea of fresh thinking around support for financial wellness and financial knowledge.

Yes - in the workplace retirement space I came from there are a number of tools and resources that participants have available to them to make different decisions, or to map out what a level of savings looks like over a period of time.

One of the things I would love to see, particularly for the demographic of savers in these programs, is a tool that allows a saver to set a savings goal and track their progress over time. So, if someone is saving $50 every paycheck, let's congratulate them and give them some motivation if they hit a milestone at month three, or month six. And if it just so happens that they reach that goal over the course of a 12-month period? Give them more motivation. If they don't, you still give them motivation.

There are tools like that in the private sector and I would love to see tools of that nature deployed to this space.

Peter, you've shared a lot of great stuff with us. What haven't we talked about today that we should spend a minute on?

I’m excited about the fact that RetirePath is the seventh Auto IRA program to launch. And there are many other states in the pipeline that will be coming along shortly. I would be remiss if I didn't take the opportunity to thank my peers in the other state programs for the support they've provided, and the experiences they've shared.

It is still a young industry. In fact, we're at that stage where we're really trying to put some legs under these programs. We’re also moving beyond looking at these programs in a silo when it comes to expanding access. We’re starting to see that whether an employer registers with the state facilitated program, or they go out into the private market and establish a qualified plan -- at the end of the day it is expanding access. And we're still achieving the ultimate goal of closing the savings gap.

But yeah, it's still evolving. I'm excited to see what comes out of some of the newer states that will launch in the next couple of years.

We are very close in the Auto IRA world to the milestone of a billion dollars saved. It's taken a while to get there. But it's been very steady progress. The collaboration of the states working together has been one very powerful piece of the success so far.

I'm really excited to see this collaboration, along with the work that's coming out of the Aspen Institute, of course, DCIIA with the CFERS initiative, the work that Georgetown continues to do. It's really encouraging to see the focus. And I think we're getting comfortable with looking under the hood. Real slowly, we’re taking off the blinders. We're asking more serious questions. And I think that helps to further propel the work that we and others are doing. It's a good time.

There's a lot going on, in really positive ways. And we’re glad that you're here, helping to make many of those things happen, Peter. Thank you for joining us to share your experience today.

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This piece was also featured in the October 5, 2023, edition of Retirement Security Matters. For more fresh thinking on retirement savings innovation, check out the newsletter here.