Lawmakers in Springfield, Ill., decided this week to green light a new statewide private sector retirement program that will consist of individual retirement accounts to be funded by automatic employee payroll deductions.

The Illinois Secure Choice Savings Program Act or Senate Bill 2758, first introduced by Sen. Daniel Biss (D-Evanston), was approved by the Illinois General Assembly on Dec. 3 and now awaits the final signature of Gov. Pat Quinn. The bill will create the Illinois Secure Choice Savings Program Fund, which will promote “greater retirement savings for private-sector employees in a convenient, low-cost, and portable manner,” according to the bill’s language.

Collectively, the future lifetime income plan calls for offering portable accounts to employees who do not currently have access to employer-based plans. Meanwhile, new businesses or those with 25 or fewer employees can participate voluntarily. Biss notes that 2.5 million private sector workers currently have no access to retirement savings options.

Biss says this is “great news for employers,” noting they “will find it easy enough to provide plans for their employees without having to make their own selections and procurement process.”

While the program will go into effect next June, there will be a two-year window for rolling out the program in order to ensure a smooth implementation process. Also, a new board, composed of both employers and employee interests, will overlook “risk management, investment firms, and investment options.”

Also see: Illinois lawmakers consider private sector retirement options

Biss adds that state officials will work closely with employer groups to “ensure that there is both a strong representation on the board of the priorities of employers. And simultaneously, [that] there’s a good communication to ensure employers understand how exactly the program works, and what it does and does not expect of them,” he explains.

According to Abdon M. Pallasch, the state’s assistant budget director, the Illinois Secure Choice Savings Program “represents a thoughtful and innovative way to help people save for their retirements.” Also, state treasurer-elect Mike Frerichs said in a statement that he will help implement the program next year.

The Illinois private sector retirement bill picked up steam last spring – passing the Senate and a House committee – but fizzled out when the Illinois legislative session ended in May. The state-run program was first introduced in January.

It followed a move by Connecticut legislators to create a new board to study the feasibility of creating of a public retirement plan for private sector workers who don’t have access to an employer-sponsored plan. Previously, lawmakers in Maryland and Wisconsin introduced similar private sector employee retirement efforts that mirrored California’s 2012 mandate for employers to contribute 3% of a worker’s salary to a retirement account.

Also seeConnecticut passes public retirement plan legislation

When asked if other states will follow the Illinois model, Biss notes that its passage does help open up the policy discussion, but it may also depend on how the program is implemented and received.

“I think just the fact that this was passed will change the landscape,” Biss says. “I am obviously 100% committed to carefully, meticulously, properly, effectively, ethically rolling it out here. And as it rolls out well and works, that will also make it much easier for other states to take the plunge.”

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