State Sen. Daniel Biss (D-Evanston) won a Senate committee’s approval today for legislation to address the looming retirement security crisis in the private sector.
Over 2.5 million workers in Illinois — more than half the private sector workforce — do not have access to a retirement savings plan through their employer.
“With private sector workers, especially low-wage workers, increasingly lacking access to retirement plans, Illinoisans face a severe and growing risk of retiring deep into poverty,” Biss said.
His Secure Choice proposal, Biss said, “is the only solution that gives workers a safe, portable and affordable way to save and invest while placing only a minimal burden on government and businesses.”
Under the plan in Senate Bill 2758, most employees who do not already have access to an employer-based plan would be given savings accounts similar to traditional IRAs.
New businesses and those with fewer than 10 workers could participate voluntarily. Workers could choose how much of their paychecks to invest and could opt out at anytime. Participants would also be able to select from higher-risk and lower-risk investment options.
Unlike pension plans, Secure Choice accounts would not be funded or guaranteed by the state or employers. Pooling the individual accounts would allow for lower fees and diversified, professionally managed investments.
All administrative costs would be covered by participant contributions, and businesses would not be responsible for running or funding the program.
“There is a national retirement security crisis, and more than a dozen states are currently implementing or considering a variety of solutions,” Biss said. “Illinois has an opportunity to be at the forefront of offering a low cost and innovative program that would allow our citizens to maintain dignity and quality of life after they leave the workforce.”
The bill, which next faces a vote in the full Senate, has won support from the AARP and the Shriver Center on Poverty Law.