The Secure Choice Savings Program Act, a private-sector retirement savings initiative sponsored by Sen. Daniel Biss (D-Evanston), was approved by an Illlinois House committee this morning.
“The need to address our looming retirement crisis is urgent,” Biss said in a statement, “There are 2.5 million Illinois workers likely to retire into poverty because they lack access to retirement accounts through their employers.”
“The good news is that this solution costs government and employers nothing and actually gives small businesses a boost by letting them compete for the best hires with larger companies that can afford retirement benefits,” Biss added, thanking Rep. Barbara Flynn Currie for leading support for the bill in the House.
The Secure Choice Savings Program would give employees access to portable savings accounts if their employer is a business with 25 or more workers that has been in existence for at least two years and doesn’t already offer retirement plans to their workers.
Other businesses could participate voluntarily.
Automatic withdrawals would invest three percent of workers’ paychecks in their accounts each pay period, but an employee could change their contribution rate or opt out at any time. Participants would also be able to select from higher-risk and lower-risk investment options.
Neither the state nor employers would contribute to Secure Choice retirement accounts; pooling the individual accounts would simply allow for lower fees and diversified, professionally managed investments.
All administrative costs would be covered by participant contributions. Businesses would not be responsible for running or funding the program, nor would they be liable for the performance of their employees’ investments.
“In the 21st century economy, people increasingly change jobs and careers many times during their working lives,” Biss said. “Illinois workers need a 21st century option for their retirement plans that’s portable and follows them as they change jobs. Most importantly, we have a responsibility to provide this option to Illinoisans so they can save their own money and retire in dignity.”
The Secure Choice Act, Senate Bill 2758, can now be considered by the full House.