Program would give more than 2 million Pennsylvanians access to retirement plans through employers
Philadelphia, PA - Pennsylvania Treasurer Joe Torsella, Senator Art Haywood and Representative Mike Driscoll today met with Nancy Morozin, owner of the Dining Car in Philadelphia, to discuss the proposed Keystone Saves auto-IRA program.
“We are at a crisis point in retirement security across the nation—but particularly here in Pennsylvania. Business owners’ willingness to meet and discuss the need for this tool demonstrates their desire to help employees save. Keystone Saves will give employees an easy and inexpensive way to save for the dignified retirement they deserve, while employers gain another benefit to offer workers by simply administering a payroll deduction.”
Pennsylvania Treasurer, Joe Torsella
More than two million working Pennsylvanians currently lack access to workplace-sponsored retirement plans. The proposed Keystone Saves legislation would enact a state-administered auto-IRA program, giving employers the ability to offer retirement savings options for their workers—something that can otherwise seem impossible to do because of cost and complexity of plans. The state-administered fund would be a fiduciary trust fund for employees, not funds that can that could be accessed by state government, and would be managed by a private sector vendor chosen through a bid process, much like the PA 529 Investment Plan.
“As former Democratic Chair of the Aging and Youth Committee and as a member of the Finance Committee, I saw the challenges that hardworking individuals face when they have limited retirement savings. There are more than 2.1 million Pennsylvanians who do not have access to a workplace retirement savings plan. In the state legislature, we are working together on a solution.”
Pennsylvania Senator, Art Haywood
“Retirement security is a serious issue for the state, with a very large number of residents beginning to retire without the savings needed to meet their expenses. Ignoring this will have devastating effects on both future retirees and the financial well-being of the state as a whole. I remain focused on making sure that every Pennsylvanian has the opportunity to save for a secure retirement and applaud Treasurer Torsella for doing the same.”
Pennsylvania Representative, Mike Driscoll
Nationwide, 1 in 3 Americans have $0 saved for retirement. Evidence shows that automatic deductions are paramount to saving, and those with access to retirement savings tools at work are 15 times more likely to do so. The Keystone Saves auto-IRA program will be designed to auto-enroll employees at default contribution rates, while also giving them the option to opt out. The lack of retirement savings plans through employers is a widespread issue in the hospitality industry. Pew researchers discovered only 26% of the industry’s employees have access to workplace retirement plans.
State-run auto-IRA plans are currently in place or underway in six states, including California, Connecticut, Illinois, Maryland, New Jersey and Oregon.
A Treasury commissioned study concluded that insufficient retirement preparedness will cost the Commonwealth an extra $14.3 billion in assistance costs over 15 years, and have an overall negative impact of nearly $16 billion during that same time period.
The Treasury Department’s Private Sector Retirement Security Task Force delivered its final report in March, with final recommendations that included the establishment of a state-run auto-IRA program.
For more details about the Pennsylvania Treasury Department’s position on the retirement security crisis please read Treasury Notes.