As states across the country take steps to address the financial needs of retiring workers, Illinois lawmakers are considering a new bill that would establish a retirement savings program for private sector employees that will be funded through automatic payroll deductions.
Illinois Senate Bill 2758, first introduced in January by Senator Daniel Biss (D-Evanston), calls for the creation of the Illinois Secure Choice Savings Program Fund a state-run program that will be financed through payroll deductions from participating employees. The bill favorably passed through a House committee last week.
Recently, Connecticut legislators approved a plan to create a new board to study the feasibility of creating of a public retirement plan for private sector workers who dont have access to an employer-sponsored plan. Previously, lawmakers in Maryland and Wisconsin introduced similar private sector employee retirement efforts that mirrored Californias 2012 mandate for employers to contribute 3% of workers salary to a retirement account.
In Illinois, there are 2.5 million workers without access to retirement accounts who could find themselves in poverty down the line, says Biss. He says the new bill, by creating personal individual retirement accounts for employees without access to employer plans, can take a pretty significant bite out of it [the retirement problem] without costing government or employers anything.
What this bill fundamentally does is make it much, much easier for small- and medium-sized employers to offer a workplace retirement savings plan to their employees, Biss tells EBN. I think over time will make them more competitive and more attractive to workers, and more able to retain the workers they want to retain.
If passed before the legislative session ends May 31, the Illinois Secure Choice Savings Program Act will affect employers that have 25 or more workers and that have been in operation at least two years. The retirement savings option allows employees to tweak their contribution rate from an automatic 3% withdrawal rate as well as opt out at any time.
The Illinois Secure Choice Savings Program Fund will be managed by a seven-member board that includes state treasurer Dan Rutherford, controller Judy Baar Topinka, director of the states Office of Management and Budget Jerry Stermer and four members appointed by the governor.
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