Proposed legislation could help 2.1 million working Pennsylvanians save for retirement
Allentown, PA - Treasurer Joe Torsella, along with State Representatives Michael Driscoll and Michael Peifer and Senator Art Haywood met with stakeholders today in Allentown to discuss the new bipartisan Keystone Saves proposal that would enact a state-facilitated, privately-administered auto-IRA program.
Right now 2.1 million working Pennsylvanians lack access to an employer-sponsored retirement plan. The inability of workers like these to conveniently save for retirement in their workplaces is fueling the retirement security crisis here in Pennsylvania and nationwide.
“Keystone Saves is about making sure every working Pennsylvanian has the tools they need to easily and inexpensively save their hard-earned money for their retirement—ensuring a secure future. Keystone Saves will not only help employees build a nest egg, but it also gives employers the ability provide this important benefit to their workers—something they want to do.”
Pennsylvania Treasurer, Joe Torsella
With Keystone Saves, employers will have access to a simple and inexpensive auto-IRA program to offer employees. This important benefit is oftentimes out-of-reach to employers due to cost and complexity of setting up investment plans. Keystone Saves would help remove those hurdles. A study by AARP reveals that with access to a retirement plan at their jobs, workers are 15 times more likely to start saving than those without. Keystone Saves is designed to automatically enroll employees in low-cost retirement savings products, while preserving their ability to opt out.
“Before my wife and I began auto savings we saved little. However, after starting auto savings from payroll, our savings increased significantly and helped us to pay for our three children to attend college. The same can happen for retirement.”
Senator Art Haywood
“It is becoming increasingly more important that as Pennsylvanians live longer, there is a means to adequately save for retirement. This ability will help Pennsylvanians ensure their quality of life remains high to enjoy their Golden Years of life.”
Representative Mike Peifer
“A very large number of Pennsylvanians are beginning to retire without the savings needed to meet their expenses, so it’s a very big issue for the state. The financial security of future retirees and the financial well-being of the state are too much at risk to ignore it. I remain focused on making sure that every Pennsylvanian has the information and opportunity to save for a secure retirement and I applaud Treasurer Torsella for doing the same.”
Representative Mike Driscoll
Keystone Saves also has the support of Senator Pat Browne. Browne stated:
“More than two million working Pennsylvanians do not have access to a retirement savings program at work, and 750,000 workers who do have access to a program at work do not participate. This has to change. If it doesn’t, Pennsylvania taxpayers will be the ones who have to cover their costs in retirement through long-term care and other public assistance programs. I am pleased to work in a bi-partisan, bi-cameral effort, along with Treasurer Torsella, to introduce legislation that will provide for a private retirement savings plan for Pennsylvania workers whose employer does not offer a retirement plan. This ensures that all Pennsylvanians will have financial security when they retire.”
Senator Pat Browne
This state-facilitated Keystone Saves auto-IRA program will be privately managed and ultimately become self-sustaining, much like the PA 529 College and Career Savings Program. Funds will be held in a fiduciary trust that is not accessible to state government for any other purpose.
Nationwide, 1 in 3 Americans have $0 saved for retirement, and a Treasury commissioned study concluded the lack of retirement security in the Commonwealth will cost state coffers $14.3 billion in extra public assistance over 15 years. The overall negative economic impact over that same time is nearly $16 billion.
Six states currently have state-run auto-IRA plans in place including California, Connecticut, Illinois, Maryland, New Jersey and Oregon.
The Treasury Department’s Private Sector Retirement Security Task Force delivered its report in March, with final recommendations that included the establishment of a state-run auto-IRA program.
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