RetirePath Virginia Hits the Road

RetirePath Virginia, the state-run program that will provide retirement plan coverage to Virginians whose private-sector employers do not, is now in operation. Phased enrollment began on July 1, 2023. 

RetirePath Virginia is a payroll deduction IRA program. Employees are automatically enrolled, but they can opt out if they want to. Accounts are portable—employees can take their accounts with them if they change employers. 

Employers with 25 or more full-time employees and that have been in operation for two years or more and that do not already offer a retirement benefit are now required to allow employees to participate. According to the Virginian-Pilot, the first notifications were to be sent out on June 20 to more than 8,000 eligible Virginia employers. Registration began on July 1. 

Virginia529 Role

Virginia529, which administers the state's 529 program, oversees RetirePath Virginia. Virginia529 has selected Vestwell as the RetirePath Virginia program administrator and BlackRock as the investment manager. Vestwell, in partnership with BNY Mellon, is providing recordkeeping, custodial services and customer support to participating RetirePath Virginia employers and employees. 

The 25-employee threshold “is one of the provisions we don’t love” about the statute creating RetirePath Virginia, said Mary Morris, CEO of Virginia529 in a June 13 Williams Mullens Benefits Companion podcast. She said that her organization would like for that employee threshold to be a smaller number “because with the 25-employee threshold we lose a lot of employers who aren’t able to offer a retirement solution.” 
 

The Bigger Picture

Morris also stressed that the program has a broader reach than just the employees it serves. 

An additional factor, she said, is that it will save the commonwealth of Virginia money. “The cost of doing nothing,” Morris said, as ESI determined in a study, is “close to $12 billion over the next 15 years,” due to the needs of those who would retire without sufficient assets. 

“We’re not trying to be in a competition with the private sector, we’re just trying to provide a solution that no one’s taken up before,” Morris said. She continued, “We’re hoping this is not the end for employers,” adding that they see it as a way for employers to show “we care about our employees and want them to be prepared for the future.”