AARP Pushing Retirement Savings Plans for Private Sectors Workers without 401s

In addition to paid family leave, AARP is pushing a retirement savings plan as one of its top priorities in this legislative session.  The New York State Secure Choice Savings Plan would automatically deduct savings from a worker’s payroll unless they opted out.  52% of private sector workers in the state do not have a retirement plan such as a 401k plan paid provided for them by their employer.  47% of those without a plan are minorities including over 67% of Hispanics.

A similar bill passed the New Jersey Legislature in 2015 but was vetoed by Governor Chris Christie last month.  Instead, he proposed a marketplace for retirement savings and legislators passed his proposal, calling it a start toward the bill they preferred which he vetoed.  California approved a similar plan  in 2012.  Illinois approved it last year and it will take effect in 2017.  Maryland, Minnesota and Oregon are among other states considering it.  In the New York State Assembly the bill has been referred to the Government Employees committee – odd because it is about private sector employees.

Here are more details on the AARP supported plan

New York State Secure Choice Savings Program- A.8332-A(Rodriguez)

same as S.6045-A(Savino)
• The legislation establishes New York State Secure Choice Savings Program. The program creates a self-sustaining retirement savings option through an automatic IRA payroll deduction for private sector employees who have no way to save for their future through their workplace. The savings account would be portable and the employee can opt out at any time.

• Access to an employer-based retirement savings plan is critical to helping New Yorkers help themselves by building financial security and independence later in life. Workers with access to such a savings plan at work are 15 times more likely to save for retirement than those who lack access. Yet, about 52 percent of New York’s private sector employees—roughly 3,507,000—work for an employer that does not offer a retirement savings plan.

• The probability of having a workplace retirement plan also differs considerably by workers’ earnings level, education, and race and ethnicity. Access to a plan differs substantially by race and ethnicity: About 67 percent of Hispanic workers, about 52 percent of African Americans, and 36 percent of Asian Americans lacked access to an employer-provided retirement plan. Minorities accounted for about 47 percent (1,649,000) of the roughly 3,507,000 employees without a workplace retirement plan.

• The legislation would give millions of New Yorkers access to savings options so they can build their own economic security. Retirement savings help workers achieve financial resilience through their own efforts. Greater access could also help improve economic mobility and reduce wealth disparity.