North Carolina lawmakers have introduced a new bill aimed at making it easier for contractors and gig economy workers to save for retirement. The proposed legislation would create a state-operated IRA system that allows for automatic paycheck deductions. Rep.
Jarrod Lowery, R-Robeson, who filed the same bill two years ago, believes the timing is right to push for this change. He cites concerns over Social Security stability, inflation, and the increasing number of people working independently or in subcontracted jobs as reasons for the bill’s importance. “We’re talking about barbers, laborers, factory workers, farm workers, electricians,” Lowery said.
“If they’re prepared for retirement, they can live those golden years in the decency they deserve.”
Currently, many small businesses do not offer retirement investment options, leaving more than 1.7 million families in North Carolina without access to a retirement savings program through work. Although anyone can open an IRA independently, studies show that people are less likely to save for retirement without a direct paycheck deposit option. House Bill 79 proposes the establishment of a state committee to create this system for eligible workers and businesses.
Bill proposes state-operated IRA system
The estimated cost to create the new IRA system is $1 million, which would be managed by the Department of Commerce. However, Lowery argues that it would pay for itself by reducing the number of older people qualifying for government assistance in retirement.
Supporters of the bill believe that it would not only help individual workers save for retirement but also enhance small businesses‘ competitiveness in hiring and retaining workers without the need to fund retirement benefits like a 401(k). Rep. Jeff McNeely, R-Iredell, a small business owner with around 20 employees, supports the initiative.
He notes that his business struggles to compete with larger companies that offer more benefits, forcing him to pay higher wages to attract talent. McNeely believes that this new program would be a valuable tool for small businesses. The backbone of America is small entrepreneurs working hard to create something,” McNeely said.
“This is going to be another tool in my toolbox, and it’s going to be a really good tool. I could use it a lot.”
As the bill progresses through the North Carolina General Assembly, its supporters hope that it will provide a much-needed solution for workers in the gig economy and small businesses, ensuring a more secure retirement for many North Carolinians.