A financially secure retirement is part of the American dream – but about 50% of all working Americans are not covered by a retirement plan at their place of work. Employees of small- and medium- sized businesses are most at risk of going without access to a workplace-based retirement plan.

This is not surprise, given the dearth of low-cost options available to these employers. Time spent on paperwork and administration aside, most plans require an employer contribution or match. Those that don’t typically have high fees, while cheaper plans either offer fewer choices for workers or have long vesting periods.

Today’s small businesses and their workers need access to a retirement plan that is:

1. Efficient (low-cost);
2. Safe (well-managed); and
3. Flexible (scalable and portable).

In response, a growing number of states are picking up on the idea of an UVRA to meet those needs.

Um, a what?

UVRA (pronounced: oo-vrah) stands for Universal Voluntary Retirement savings Account.

The basic idea is to use a state’s existing retirement or investment infrastructure to pool the investments of thousands of workers at small- and medium-sized businesses. The result? Extremely low fees; professional fund management; and a portable retirement plan that helps smaller businesses compete with the big boys on the block.

UVRAs aren’t intended to replace current retirement plans. They are designed for individuals and businesses without workplace-based retirement investing. It’s a supplement to Social Security (which provides a defined benefit pension for older Americans, but alone is barely enough to keep many retirees out of poverty).

A growing number of states are looking into the concept, including: California, Connecticut, Illinois, Maryland (House & Senate), Michigan (House & Senate), Pennsylvania, Washington and West Virginia.