N.C.'s employees use a credit card for retirement savings
When state workers in North Carolina buy a CD, a new shirt or a box of cereal, they can now choose to have a percentage of what they spend deposited into their state 401(k)-style accounts. The state is the first in the country to develop electronic rebates for retirement savings, a program called the North Carolina Accelerated Savings Plan.
Participants are allowed to use any credit card, and simply need to register with the state to join the program. As long as they patronize one of the nearly 500 participating merchants, a percentage of their purchase will go into their retirement account.
State Treasurer Richard Moore says that he was approached by a local technology vendor with the idea. After examining the proposal and finding no additional costs to the state or the retirement system, Moore approved it. The vendor will be paid through a fee assessed on participating merchants. "It's been kind of a eureka moment," Moore says. "If the businesses are willing, why didn't we think of this?"
Moore sees the plan as a way to publicize retirement saving. About 700,000 current and retired public employees there have a traditional retirement plan, but only 150,000 have opted to open a supplemental 401(k) account. Since the rebate program only works with the supplemental accounts, Moore hopes that more people will open accounts to take advantage of the rebates. "I'm a huge fan of forced savings," he says. "Once people see the power of compound interest, they can get hooked."