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  #61  
Old 04-03-2018, 07:11 PM
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Mary Pat Campbell
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NEW YORK

https://www.nytimes.com/2018/04/02/b...?smid=tw-share

Quote:
New York Envisions a State-Run
Retirement Plan for Private Workers
Spoiler:
New York is close to joining a growing list of states that are creating a retirement
plan option for private sector employees who do not have access to 401(k)-like
programs at work.

The New York program was included in Friday’s budget deal, which Gov.
Andrew M. Cuomo is expected to sign. The plan would enable businesses to provide
workers with access to Roth individual retirement accounts overseen by the state. An
estimated 3.5 million private sector employees in New York work for employers that
do not offer a pension, a 401(k) plan or another savings option, according to AARP,
which has lobbied in support of the plans.

“For years, we have been working to develop and pass a retirement program
that would give millions of New Yorkers the opportunity to save for their futures,”
Mr. Cuomo said in a statement. “In this year’s budget, we proposed and passed a
common-sense, progressive reform that will strengthen our work force.”

Ten states, including New York, are on the verge of enacting such plans or
already have them. The plans have been moving ahead even though Congress rolled
back Obama-era rules meant to encourage states to create retirement programs for
people without workplace savings accounts.

Oregon was the first state to begin rolling out its program last summer, and
several other states are in varying stages of progress. Besides New York, they are
California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Vermont
and Washington, according to the Center for Retirement Initiatives at Georgetown
University.

Seattle enacted a program of its own in November, while this year, more than 15
states have introduced legislation to start programs or study the issue, the center
found.

The state’s plans differ in style. The New York State Secure Choice Savings
Program, for example, will be voluntary — employers will not be obliged to sign up
and will be responsible only for enabling payroll deductions to the Roth individual
retirement accounts.

Much of the plan’s finer details — including the investment manager, the
specific investments and their fees — is to be decided by a seven-member board.
(The version of the program in Mr. Cuomo’s proposed budget capped investor
expenses at 0.75 percent of total investments, but the final version did not include
such a cap.)

In contrast, California, Connecticut, Illinois, Maryland and Oregon mandate
that certain employers enroll their employees in the state program if they don’t
already offer an option. New Jersey and Washington provide a marketplace where
employees can choose among providers and offerings. Washington’s program, which
is also available to the self-employed, opened to businesses and individuals last
month.

The New York legislation calls for the plan to be developed in roughly two years,
though it could be delayed by as much as an additional year.

Correction: April 2, 2018

Because of an editing error, an earlier version of this article misidentified one of the
states that are creating a retirement program for people without workplace savings
accounts. It is Vermont, not Virginia.

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  #62  
Old 04-11-2018, 06:29 PM
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https://www.forbes.com/sites/ebauer/...s-accounts/2/#

Quote:
That being said: isn't a state or nationwide plan in which everyone is auto-enrolled a lot more efficient? Oregon has already initiated this with OregonSaves, and California is in the process of implementing it. Wouldn't the costs be lower due to a single management firm? Wouldn't auto-enrollment cut the need for any sort of efforts at advice?

I'll be honest -- state/nationwide plans make me nervous. There's a single investment firm chosen by the state (which might reduce fees, but also raises the prospect of pay-to-play corruption), and a limited number of funds (which may be fine, but limits choice, for example, if a participant wants to elect an "ethical" investing fund, or disagrees with the state-appointed fund manager's decisions to favor or disfavor certain companies). These funds are still in there very early stages, with OregonSaves having been launched in 2017. It may be that these programs are ultimately hailed as a great success, but we may also see limitations to their effectiveness. And in any case, these plans are also limited by the low IRA cap and lack of financial wellness community outreach.
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  #63  
Old 04-24-2018, 08:28 AM
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ILLINOIS

https://chicago.suntimes.com/?post_t...045484#new_tab

Quote:
Illinois to start program to boost retirement savings
Spoiler:
CHAMPAIGN, Ill. — Illinois will soon begin a program requiring many employers to help create voluntary retirement-savings plans for employees and offer automatic payroll deductions.

State Treasurer Mike Frerichs tells the News-Gazette that Secure Choice could eventually cover 1.2 million Illinois residents.

Frerichs said Wednesday that businesses that have been operating for two years and have at least 25 employees must either create their own retirement plan or participate in Secure Choice. Employers aren’t required to contribute to the program or pay a fee to participate.

Frerichs says employees will automatically have 5 percent of their income put into a savings account, but that percentage can be changed. Employees may also opt out of the program.

The program will begin next month with employers who have volunteered to participate.
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Old 04-27-2018, 03:10 PM
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https://www.nytimes.com/2018/04/20/y...-accounts.html

Quote:
For Workers Without Retirement Savings, State-Run I.R.A.s Can Pay Off

Spoiler:
A new breed of state-based savings accounts can help workers prepare for retirement, in part by allowing them to push back the time when they file for Social Security payments, a new analysis suggests.

Half of all states have considered plans to offer automatic individual retirement accounts, and at least five (California, Connecticut, Illinois, Maryland and Oregon) have begun offering them or have taken steps toward doing so. The plans vary in their details but, in general, are for workers at private-sector employers that don’t offer retirement plans. Those workers are automatically enrolled in the state I.R.A. program and have contributions withdrawn from their paychecks, although they can choose to opt out or change their contribution.

Many people think they must start receiving Social Security as soon as they retire, but the two steps don’t have to be done simultaneously. People can start claiming their federal benefits at age 62, but waiting at least a year or two to collect means their monthly payments will be larger because of the way the federal program is structured.

Those enrolled in the new state-sponsored accounts could, instead, use that money to temporarily cover their expenses after they retire, allowing them to delay claiming their Social Security benefits for a year or more, the report from the Pew Charitable Trusts said.

Since many people lack adequate retirement savings or traditional fixed pensions, the idea of delaying Social Security payments to receive bigger checks is “getting traction,” said Alison Shelton, senior research officer in Pew’s retirement project.

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Some workers may be unable to delay claiming benefits past age 62, if they are in poor health or unemployed. But others simply may be reluctant to postpone the benefits because they lack savings. State-based individual retirement accounts that automatically enroll workers who don’t have retirement benefits through their employers can help meet that need, Pew’s report said. Workers can delay claiming their federal benefits, and instead withdraw an amount equal to what their monthly benefit would be from their so-called auto-I.R.A.

For example, if a worker retiring at 62 would get $700 a month in benefits, but had $8,400 in a state-based auto-I.R.A., the worker could wait a year to claim the benefit and instead withdraw $700 a month from the retirement account. The monthly benefit a year later, when the worker was 63, would climb to about $750.

The approach can especially benefit younger, minority and lower-income workers, who are less likely to have job-based retirement plans, Pew said.

Under a simulation run by the Social Security Administration at Pew’s request, Pew found that if workers contributed 3 percent of their income to a state-run auto-I.R.A. for 31 years, starting in 2019, nearly 40 percent of them could delay Social Security by a year or more. (The model accounted for workers entering and leaving the program, and for older workers who would contribute for fewer years.)

States have been pursuing the plans even though Congress has scaled back rules meant to encourage their creation.

Oregon, for instance, completed a test of its OregonSaves program last year, and began expanding it statewide in January. As of mid-April, more than 600 employers had registered for the program, and more than 31,000 employees — more than three-quarters of those eligible — were enrolled, with about 10,000 making contributions, Oregon officials said.

New York recently said it was considering an auto-I.R.A. program, with plans to offer it in two years.

Here are some questions and answers about state-based auto-I.R.A.s and Social Security:

If I am automatically enrolled in a state-based I.R.A., can I drop out if I choose?

Yes. In general, the plans automatically enroll eligible employees and set payroll contributions at a fixed percentage — say, 5 percent. But workers can opt out of the programs or reduce the amount withdrawn from their paychecks, at any time.

How do I determine my “normal” retirement age for Social Security benefits?

Your normal retirement age — the age at which you receive full federal benefits — depends on the year in which you were born. If you were born in 1960 or later, your full retirement age is 67.

How early can I claim Social Security retirement benefits?

The earliest age to claim retirement benefits under Social Security is 62, but you generally will receive a significantly reduced monthly payment. Someone who would receive $1,000 a month at a normal retirement age of 67, for instance, would receive $700 at age 62 — a reduction of 30 percent, according to Pew’s report.
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Old 06-01-2018, 04:37 PM
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CALIFORNIA
LAWSUIT

https://www.wsj.com/articles/califor...dle-1527845402

Quote:
California’s State-Run Retirement Plan Faces Legal Hurdle
Nonprofit files lawsuit against CalSavers months before its launch; challenge could have knock-on effects
Spoiler:
California’s state-sponsored retirement-savings plan, expected to become the country’s largest when it launches in coming months, was hit with a lawsuit in the first major legal challenge to states developing or authorizing auto-enrollment programs.

The nonprofit Howard Jarvis Taxpayers Association filed the suit Thursday in U.S. District Court for the Eastern District of California, seeking to invalidate the CalSavers program on the basis that it violates federal pension laws, said Jon Coupal, president of the association. The suit also seeks an injunction to stop public funding of the program.

The nonprofit’s legal argument is that states can’t impose a retirement plan requirement since those plans are already regulated under a federal law, the Employee Retirement Income Security Act of 1974, which governs 401(k)-style plans.

“This looked to us like significant government overreach,” said Mr. Coupal, who also cited the “administrative burden on employers” such as the association, which doesn’t currently offer its employees a retirement savings plan.

California Treasurer John Chiang said in an email the state remains confident that it is on strong legal ground.


Almost a dozen states either have a retirement program on the market or are developing one. Oregon last summer became the first to start requiring employers that don’t offer a retirement plan of their own to give employees access to a state-run plan, by automatically enrolling them in individual retirement accounts invested in mutual funds. Employees have the right to opt out.

Illinois is expected to launch a similar pilot program this summer, and California is scheduled to follow suit toward the end of this year or in 2019.

Proponents of state-run retirement programs say they are concerned about the estimated 42% of private-sector workers who don’t have access to a workplace retirement-savings plan, many of whom don’t save at all. State legislators also are trying to save taxpayers money over the long term by reducing retirees’ reliance on public-assistance programs, including Medicaid.

“The Howard Jarvis Taxpayers Association shockingly fails to recognize that if we don’t help our citizens build a nest egg with their own money, they will ultimately become wards of the state wholly dependent on public assistance for their most basic needs,” Mr. Chiang said in a statement.

California estimates that 6.8 million people who currently lack access to a retirement savings plan at work would be enrolled under the program, which requires employers with five or more employees to participate.

So far, CalSavers has borrowed $1.5 million from the state to fund its startup expenses—a sum the program expects to repay over a few years with a portion of the fees participants pay on their balances.

CalSavers is separate from Calpers, which provides pensions for California state employees.

The legality of state auto-enrollment programs was thrown into question early last year when Congress scrapped two Labor Department rulings that had paved the way for those programs by clarifying that they would not be covered by ERISA.



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Some states have adopted approaches considered less vulnerable to legal challenges. Washington state, for example, avoided a coverage mandate in favor of establishing a state-run marketplace to help small companies shop for a retirement plan if they choose to offer one. Its program recently became the second to launch.
http://www.latimes.com/business/la-f...531-story.html

Quote:
California created a savings program for workers without retirement benefits. A group is suing to kill it
Spoiler:
A California anti-tax group is suing California Treasurer John Chiang as it tries to put the kibosh on a program that would provide retirement savings accounts to millions of California workers whose employers don’t offer a pension or 401(k).

In a lawsuit filed Thursday in federal court in Sacramento, the Howard Jarvis Taxpayers Assn. — which championed the landmark property tax law Proposition 13 and continues to fight tax measures — argues that the retirement savings program is illegal under federal law and should be stopped before workers start signing up for accounts next year.

Beyond that narrow argument, association President Jon Coupal said he believes the savings program — called CalSavers — is a “massive government boondoggle” waiting to happen. He also said workers who want retirement accounts are free to open them on their own without the state’s help and suggested that workers not saving for retirement are acting irresponsibly.

“This is Big Brother government coming down and saying, ‘You shall do this,’” he said. “I think most people are focused on their retirement funds. There are some who are irresponsible. We believe in a society that does impute some degree of personal responsibility on individuals to look out for their own interests.”

Chiang called the lawsuit shortsighted and said his office will continue working on the program, which is set to debut in a small pilot program this year before launching statewide next year.

The CalSavers program, originally called California Secure Choice, was approved by the state Legislature in 2016 and would offer a state-run retirement account to the estimated 6.8 million California workers who are not offered a pension or 401(k) account through their employers.

Companies with more than five employees would have to sign their workers up for CalSavers if they do not offer their own savings plan. Workers would automatically have between 2% and 5% of their pay deposited into a CalSavers account unless they opt out.


POLITICS
The GOP is trying to kill California's new private-sector retirement plan. State officials vow to push ahead
MAY 10, 2017 | 2:30 PM
Coupal called the program a “camel's nose under the tent” creeping toward the creation of something akin to the state’s giant pension funds — the California Public Employees’ Retirement System and the California State Teachers’ Retirement System. He suggested that taxpayers could be on the hook if the CalSavers program goes under.

“It’s not to the taxpayers’ benefit to have a bunch of employees suddenly without their retirement benefits they have promised, because that leaves the taxpayers at risk,” he said.

The Investment Company Institute, one of a few Wall Street trade groups that lobbied against the program, raised that concern in a letter urging Gov. Jerry Brown to kill the program. Investment trade groups also argued that state-run programs would provide unfair competition and “crowd out” private plans.

But unlike CalPERS and CalSTRS, which are backed by the state and guarantee retirement payments to beneficiaries, CalSavers accounts would not be guaranteed by the state, meaning that if retirement savers lose money, the state would not have to cover those losses, Chiang said.

Any comparison to public pension funds is a red herring, he said, noting that by law CalSavers cannot rely on public funding other than a start-up loan that will be repaid over the program’s first several years.

“CalSavers won’t cost the state or taxpayers a single dime, nickel or penny,” he said.

Coupal called CalSavers the latest instance of California’s government interfering with the free market.

“We see no need for another state program when there are readily available all kinds of alternatives for private-sector employees to … open up their own” individual retirement accounts, he said.

But backers of the program, including Chiang and former state Senate leader Kevin de León (D-Los Angeles), the author of the legislation that created CalSavers, say the program is necessary because most workers don’t set up retirement accounts on their own.

Only about 10% of all workers contribute to a plan outside of work, and about 39 million U.S. workers aren’t offered a pension or 401(k) by their employer, according to the U.S. Department of Labor.

Most workers are eligible for Social Security, but that won’t provide enough income for many retirees. The National Institute on Retirement Security estimated in 2013 that about 40% of American households have no retirement savings and that Americans have saved $6.8 trillion less than they will need in retirement.

Chiang called the lack of retirement savings a crisis that “will soon degenerate into a humanitarian catastrophe,” foreseeing a situation where retirees without savings become “wards of the state wholly dependent on public assistance for their most basic needs.”

De León said if Coupal and the taxpayers association are worried about the risk to taxpayers, they should consider what might happen if workers don’t boost their retirement savings and state lawmakers are pushed to boost spending on safety-net programs.

“We have senior citizens who won’t have enough to pay for their roof, for their medication, for their food,” he said. “That’s when the state and federal government are going to have to intervene. The taxpayer will ultimately end up footing the bill.”

Though Coupal takes issue with the state’s involvement in the retirement savings market and in potential state obligations, the lawsuit itself makes a narrower argument, saying that the CalSavers program falls under the jurisdiction of a federal retirement savings law called the Employee Retirement Income Security Act, or ERISA, that governs pensions and other employer-sponsored plans.

If that’s the case, employers could be on the hook for a raft of administrative and compliance work and potentially be liable if the savings program is mismanaged.

Chiang said he expected a lawsuit over this issue, which was made more likely by actions taken last year by Congress.

Several states working on similar savings programs asked the Department of Labor under the Obama administration to specify that state-managed retirement savings programs would not be subject to ERISA. The department obliged, but Congress repealed the rule last year.

Officials in California, Oregon, Illinois and other states plan to press ahead anyway, saying the new rule was helpful but not legally necessary. They point to a 1975 Department of Labor rule that said certain savings plans are exempt from ERISA if they meet certain requirements — ones that CalSavers and other programs have been structured to meet.

Marcia Wagner, a Boston attorney who specializes in ERISA law, said that the repeal complicates the issue but that states still have a reasonable argument that CalSavers and similar plans don’t fall under ERISA. De León said he's confident the lawsuit won’t stop the program.

The lawsuit comes a day after CalSavers, which is run by a board within the state Treasurer’s office, started seeking investment firms to manage the retirement savings program. If the program rolls out as planned, the state will run a small pilot program later this year with a limited number of employers and then launch statewide in 2019.

Employers with 100 or more workers would have until the following year to sign up their employees or start offering a savings plan of their own. Companies with at least 50 workers would have another year to comply, and those with as few as five workers would have another year after that.

In its lawsuit, the Howard Jarvis Taxpayers Assn. notes that it has between five and eight workers and does not offer a retirement plan to its employees, meaning it would eventually have to participate in the CalSavers plan if its lawsuit is not successful.

“We offer a very good medical plan, but no retirement plan,” Coupal told the Los Angeles Times. “I think every single one of our employees has an IRA.”
https://www.courthousenews.com/advoc...ement-program/

Quote:
Advocacy Group Seeks to Halt California Retirement Program
Spoiler:
SACRAMENTO, Calif. (CN) –Millions of Californians whose employers don’t offer pensions collectively rejoiced in 2016 after the state’s Democratic leaders proposed and passed a state-run retirement plan for private workers, but a powerful advocacy group filed a complaint in federal court Thursday to derail the program before it starts.

Lawmakers said it was crucial to get in front of a growing crisis, with over 6 million private-sector employees not offered retirement plans by their employers. The bill’s author, Los Angeles state Sen. Kevin De Leon, called it a “big effing deal” while Gov. Jerry Brown said it was “very important” to extend retirement options to the state’s vulnerable workforce.

While the state is still sorting out details for the program called CalSavers, namely courting investment planners to manage the massive portfolio, it’s preparing to implement a pilot program this year before a statewide launch in 2019.

The Howard Jarvis Taxpayers Association on Thursday painted the state-run retirement program as unconstitutional and a waste of taxpayers’ dollars in a complaint filed in federal court in Sacramento.

“This is an undue burden on small business employers and employees alike,” the complaint states. “Congress has expressly disavowed savings arrangements established by states for non-government employees.”

The taxpayers association is best known for leading a 1978 proposition which froze property tax rates and limited annual increases to 2 percent.

Now the influential group is taking aim at CalSavers. It says the program is unconstitutional and preempted by long-standing federal law that regulates employers’ offered plans.

“Without preemption of CalSavers, such non-governmental employees’ funds will have none of the [federal] protections intended for them by the federal government since 1974,”the 10-page complaint states.

The lawsuit names the program’s administrator, State Treasurer John Chiang, also a gubernatorial candidate. Chiang defended the program, calling it low-cost, low-risk and the largest retirement expansion since the federal Social Security program was enacted.

“For an organization which styles itself as a champion of taxpayers, the Howard Jarvis Taxpayers Association shockingly fails to recognize that if we don’t help our citizens build a nest egg with their own money, they will ultimately become wards of the state wholly dependent on public assistance for their most basic needs,” Chiang responded in a statement.

As constructed, CalSavers would automatically enroll applicable employees and begin diverting 2 to 5 percent of their wages into a retirement fund. Workers can choose to opt out and the program would apply to all businesses with at least five employees that don’t offer some form of retirement savings.

The Legislature has approved a $16.9 million loan to jumpstart the program and the state has spent $1.5 million in implementation costs so far.

The measure was passed by Democratic lawmakers along party-lines. Other states such as Washington, Oregon and Illinois are considering similar legislation.

http://www.sacbee.com/news/politics-...212278954.html
Quote:
Taxpayer group sues to block California retirement accounts
Spoiler:
One of California’s leading taxpayer advocacy groups filed a lawsuit on Thursday to prevent the state from opening a government-run financial savings program that is intended to help lower-income workers prepare for retirement.

The Howard Jarvis Taxpayers Association contends the so-called CalSavers plan violates a federal consumer protection law that sets standards for retirement plans offered by employers.

The advocacy group’s director, Jon Coupal, also argues the state is incapable of managing the program for the 6.8 million Californians who might benefit from it, pointing to the state’s two underfunded public pension systems as evidence that private-sector workers are better off finding their own retirement accounts.

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“We see no need for another state program when there are readily available all kinds of programs for private-sector employees to go down the street to a financial services firm to open their IRAs,” he said.

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The California Public Employees' Retirement System and the California State Teachers' Retirement System, the state's two largest public pension funds, manage almost $600 billion and provide retirement benefits to almost 3 million public employees and retirees. They're considered underfunded because their assets are worth about 70 percent of what they owe in total to their members.

Gov. Jerry Brown signed a law in 2016 that allowed the state to offer a retirement savings plan to people whose employers do not provide pensions or 401(k) plans.

Since the recession, California leaders spent several years working with the Obama administration to create an exemption for the program in the Employee Retirement Income Security Act, which freed employers participating in the state program being subjected to the audits and controls of the federal law.

The exemption cleared a path for California and six other states to continue developing savings plans. Congress last year passed a law that negated the exemption.

"I can only wonder why states think they will be able to produce better results than the private retirement savings system, which has been an unqualified success,” Sen. Orrin Hatch, R-Utah, said at the time, according to CNN.

Advocates for California’s plan say they’re prepared to fight the lawsuit in court.

State Sen. Kevin de León, D-Los Angeles, who wrote the law creating the savings program, said the country is sitting on a “ticking time bomb” in the form of tens of millions of Americans who are unprepared for retirement. His law was aimed at helping them.

“Ultimately it begs the question is Howard Jarvis representing senior citizens and the taxpayers of California or are they representing Wall Street?” he said. “You still have a very serious public policy issue of people who have no access to any type of retirement security at their workplaces.”

The savings program is not yet open. The state Treasurer’s Office says it could begin enrolling workers as soon as next year. Treasurer John Chiang said he's confident the program can overcome the lawsuit.

Under de León’s law, employers would be required to enroll workers in the retirement plan unless they already offer a pension or 401(k) program. Employees could opt out of the state program.

The program would be overseen by a retirement savings board that would hire a private firm to manage a portfolio. The program might require a $100 million loan from the state government to get started, according to a budget request from Gov. Jerry Brown’s office.

"We remain undaunted, undistracted, and unwavering in our commitment to successfully launch a bold, innovative program which is being heralded as the most significant expansion of retirement security since the enactment of Social Security," Chiang said.

The taxpayers association filed the lawsuit in the U.S. District Court for Eastern California. Coupal said the organization wants a quick resolution so it can block the state from spending money on a new government department.

State Sen. Kevin de León, D-Los Angeles, who wrote the law creating the savings program, said the country is sitting on a “ticking time bomb” in the form of tens of millions of Americans who are unprepared for retirement. His law was aimed at helping them. Damian Dovarganes AP file

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Old 06-05-2018, 06:56 AM
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FEDERAL

https://www.marketwatch.com/story/th...gap-2018-06-04

Quote:
Opinion: The federal government should fix the pension coverage gap
50-state plans can’t be the answer; Congressman Neal has the better idea




Spoiler:
The coverage gap is the most serious problem in the private sector retirement system.

At any moment in time, less than half of private sector workers are offered any type of retirement plan by their employer. Since people rarely save outside of organized savings mechanisms, those without coverage do not accumulate retirement assets.

Right now, I am worried about Massachusetts. Like the rest of the nation, about half of the state’s private sector workers have no plan. The state’s response to date has been to launch a multiple-employer 401(k) plan open to nonprofits with 20 employees or fewer. The idea is to relieve small employers of the administrative and fiduciary burden of offering their own plans, and, through economies of scale, reduce the fees and expenses generally associated with running a small 401(k). The problem is that Massachusetts’ approach is not only limited in terms of its target population, but also relies on each employer to make the decision of whether to participate.

If the problem is to be solved at the state level, Massachusetts needs an “Auto-IRA” program, like the one already up and running in Oregon. Employers without a plan would be required to automatically deposit a percentage of each employee’s earnings in an individual retirement account (IRA). The employee would retain the ability to opt out.


When it comes to retirement, 60s are the new 50s

But adding another state to the roster of those developing their own retirement systems can’t be the right answer. Who wants a country with 50 different programs for uncovered private sector workers? I would think such an arrangement would create enormous headaches for large companies operating in many jurisdictions.

Congressman Richard Neal (D-MA) has a proposal that would solve the problem at the national level. The Automatic Retirement Plan Act of 2017 would require all employers — with more than 10 employees that have been in business for three years — to automatically enroll their employees and contribute 6% of their salary to a 401(k). For those who did not opt out, their contribution rate would be increased by 1% each year until it reached 10%.

The Neal bill is not the first to propose a federal solution to the coverage problem, but it’s the one now on the table. It would be wonderful if the Congress could move on this issue before we well-intentioned fixers create a labyrinth of complicated structures.


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Old 07-09-2018, 06:04 PM
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OREGON

https://www.plansponsor.com/one-year...s-oregonsaves/

Quote:
One Year In, Assessing the Progress of OregonSaves
In a broad statement marking the first anniversary of the OregonSaves program, State Treasurer Tobias Read suggests the pace of signups is advancing, with an average of more than a thousand people now being registered a week to start contributing.
Spoiler:
Oregon is among the states that is the furthest along in the launch of a government-administered retirement savings program for private-sector workers.

This week, the OregonSaves program revealed enrollment numbers for its first full year of operation. According to state authorities, the combined savings of the first groups of participating savers is already approaching $5 million. In addition, the state says, hundreds of thousands of additional eligible workers are on track to join as the program continues to expand statewide over the next two years.

Other states including California, Illinois and Connecticut are developing programs that are similar to the Oregon approach. In a broad statement marking the first anniversary of the program, State Treasurer Tobias Read suggests the pace of signups is advancing, with an average of more than a thousand people now being registered a week to start contributing. Most of the participants are first-time savers, according to Read. The average monthly contribution is $106.

The OregonSaves approach makes available an automatic enrollment payroll deduction Roth individual retirement account (IRA) to workers whose employers do not offer them a retirement savings option. As Read points out, this is a “key attribute.”

“Research from the AARP shows that people are 15-times more likely to save for retirement if there is a work-based option,” he observes.

OregonSaves takes a private-public partnership approach, with investments managed by the private sector in low-cost mutual funds. The program was passed into law by the 2015 Oregon Legislature and is overseen by the State Treasury, which is responsible for public finance and investment programs.

Read also points to strong demand for savings opportunities among workers in the gig economy as a big potential driver of growth in OregonSaves, and he says Treasury is accelerating the availability of OregonSaves to self-employed workers. That option will become available by the end of the year.

According to the State Treasury, OregonSaves improves the state’s business climate and economy by reducing the long-term rate of retirement poverty. In addition, Read points to research showing that even modest savings can help retirees to delay claiming Social Security benefits, allowing them to qualify for a higher level of monthly payments.

Looking ahead, the registration phases are now completed for employers with Oregon workforces between the size of 50 and 99. The next signup deadline is December 15, 2018, and applies to employers with between 20 and 49 Oregon workers.

According to the independent Register-Guard newspaper, OregonSaves now has enrolled more than 32,000 private-sector employees who previously didn’t have access to a retirement savings option at work, with an average payroll withholding of 5.14% of salary.
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Old 07-15-2018, 06:53 PM
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OREGON

http://www.registerguard.com/news/20...s-after-1-year

Quote:
OregonSaves retirement plan nears $5 million in savings after 1 year

Spoiler:
Oregon’s pioneering state-sponsored retirement plan reached its first birthday this week, after rapid growth during the past two months.

OregonSaves now has enrolled more than 32,000 private-sector employees who previously didn’t have access to a retirement savings option at work. They’ve so far set aside a combined $4.6 million of their own money through automatic payroll deductions, with an average withholding of 5.14 percent of salary.

The state-run plan doesn’t require any financial contribution from employers, but they must sign up their workers for OregonSaves if they don’t offer a 401(k) or other retirement plan. That could mean as many as 600,000 Oregonians.

The effort started last summer with volunteer businesses, then it required big businesses to get on board at the start of 2018.

But it really ramped up in mid-May, when employers with between 50 and 100 workers were brought in. Smaller businesses are far less likely to offer retirement savings plans to their workers.

The May expansion tripled the number of people in the program, while another 14,000 workers are still in the process of being enrolled. The percentage of workers proactively opting out of OregonSaves also grew during the latest influx of workers: So far, 72.5 percent of employees have stayed in the program after being automatically signed up down from around 80 percent earlier this year.

Proponents argue that setting up the automatic payroll deductions is the nudge in the right direction that workers need to start preparing for retirement.

“OregonSaves is off to a successful start,” state Treasurer Tobias Read said in a prepared statement. “By helping more people save for their retirement, OregonSaves is addressing the retirement savings crisis head-on, and making businesses more competitive.”

Several other states — including California, Illinois and Connecticut — followed Oregon’s lead in setting up state-run retirement plans.

Investment earnings for OregonSaves were poor in the first quarter of 2018, with all funds down about 1 percent in value, with the stock market sluggish.

Individual workers’ money isn’t invested until their retirement accounts reach a balance of $1,000, however, and most OregonSaves members haven’t reached that threshold.

The retirement accounts are only Roth IRAs, meaning contributions are made with after-tax dollars. They’re invested by Ascensus, a Pennsylvania company that won a 10-year state contract to handle OregonSaves funds.

Workers have a limited range of investment options, mostly index funds and other low-cost funds, and pay an annual account fee of 1.05 percent to cover state and investment costs.

The fees cover the startup costs and ongoing staff for the new government program.

Employees can track their accounts on a state-run online portal and keep their Roth IRA when they change jobs. They can withdraw the money penalty-free once they reach the age of 59.5 or for a few other strictly limited purposes.

The next expansion is for Oregon employers with between 20 and 49 workers, who will have to enroll their workers by Dec. 15. Self-employed Oregonians also will be eligible for the program by the end of 2018.


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Old 07-17-2018, 10:25 AM
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ILLINOIS

http://www.fox32chicago.com/news/loc...counts#new_tab

Quote:
New Illinois program automatically deducts $ from workers' accounts, put it in retirement accounts
Spoiler:
SPRINGFIELD, Ill. (AP) -- A new state program will automatically deduct money from the paychecks of about 1.2 million Illinois residents for retirement savings.

The move could reduce the use of food stamps, Medicaid and other publicly funded social programs, said Illinois Treasurer Michael Frerichs. Illinois Secure Choice is being phased in more than three years after becoming law, The Daily Herald reported.

The state-sponsored retirement program works with certain businesses with 25 or more employees. The businesses will be connected with a financial firm that will provide ways for workers to build retirement savings with after-tax cash deducted from each paycheck for a Roth individual retirement account.

Workers will be eligible for automatic enrollment, 5 percent of gross pay being deducted and placed in a retirement fund. Enrollees will be able to switch savings rates and retirement funds or can opt out of the program.

The U.S. Chamber of Commerce opposes it, calling it a "poor substitute" for typical employer-provided retirement plans.

Eight businesses have volunteered to be in the Secure Choice pilot program, Frerichs said. All companies with 25 or more workers must be part of the program or contract directly with firms that handle employee retirement accounts by November 2019.

Illinois is the second state in the U.S. to participate in such an initiative.
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Old 07-18-2018, 10:56 PM
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https://www.washingtonpost.com/opini...=.91c8da485aca

Quote:
State-run retirement plans are the wrong way to protect the poor

Spoiler:
Andrew G. Biggs is a resident scholar at the American Enterprise Institute and a former principal deputy commissioner of the Social Security Administration.

Five states are launching plans to automatically enroll employees, predominantly lower-income workers, in state-administered individual retirement accounts. More than 20 other states are considering "auto-IRA" programs like those of California, Connecticut, Illinois, Maryland and Oregon. Auto-IRAs seem like an obviously benign effort: Only about 20 percent of low-income workers participate in 401(k) plans, and many low earners depend heavily on Social Security when they retire.

But bureaucratic good intentions sometimes address problems that aren't problems or end up doing more harm than good. In the case of auto-IRAs for low-income workers, states are likely doing both: These workers are in better shape for retirement than misleading news coverage suggests, and auto-IRAs could saddle them with higher debt while disqualifying them from means-tested government health and welfare programs — thus saving the states a fortune.

The perception that Americans are dangerously negligent in saving for retirement is fed by anecdote and well-meaning but flawed research. Government data show that retirement incomes and savings have never been higher. According to a 2017 Census Bureau analysis of Internal Revenue Service data, the median retiree's total income rose by 32 percent above inflation from 1990 to 2012, far faster than the 11 percent growth of median salaries. Likewise, Federal Reserve data show that total retirement savings have risen sevenfold since the heyday of traditional pensions in the 1970s, and data from the Organization for Economic Cooperation and Development show that Americans have saved far more for retirement on average than workers in other developed countries.


Nor is it clear that low-income Americans need to dramatically boost their savings. The Congressional Budget Office finds that Social Security provides low-income retirees with benefits equal to roughly 90 percent of their inflation-adjusted career-average earnings. The same 2017 Census Bureau research shows that from 1990 to 2012, incomes for low-income retirees rose 31 percent and poverty among retirees dropped from 9.7 percent to 6.7 percent. Economists at the Investment Company Institute and the IRS found that typical low-income retirees have a total income equal to 103 percent of their earnings just before retirement. None of this points to a dramatic need for low-income workers to save more.

Moreover, state auto-IRA plans could leave low-income households burdened with debt. Yes, automatically enrolling workers in retirement accounts would raise their retirement savings. But a 2017 study by prominent behavioral economists found that when the federal government auto-enrolled a group of Defense Department employees, less-educated employees amassed new debt more than three times larger than their new savings. With less money arriving in each paycheck, workers may have relied more on high-interest credit cards and made lower down payments toward auto and mortgage loans. Low-income workers, who have roughly $4,000 in potentially high-interest credit card, auto loan or other types of debt, would be better off retiring that debt before saving for retirement.

Even modest savings in auto-IRA plans could disqualify tens of thousands of households from means-tested benefit programs such as food stamps, Temporary Assistance for Needy Families, Supplemental Security Income, housing subsidies and Medicaid, which have asset and income tests that can be triggered by as little as $1,000 in savings. Poor households would be forced to spend down their savings — perhaps paying a penalty for early withdrawals — before regaining eligibility for benefits.


The actuarial firm Segal Consulting projected that in the first five years alone, state auto-IRA plans would cause more than 47,000 households nationwide to lose access to Medicaid. Their loss would be the states' gain: more than $680 million not spent on Medicaid benefits.

One defense of state auto-IRA plans is that they would allow workers to opt out. But the whole premise behind automatic enrollment is that most workers will follow the default.

Clearly, this idea hasn't been fully thought through. What can be done?

First, state auto-IRAs should not apply to truly low-income workers, with whom there is the most potential for harm. A good model is Britain's national saving plan policy of automatically enrolling only workers with salaries above £10,000 pounds (about $13,000).

Second, the best way to protect the poor in retirement would be through Social Security reform. Granted, the overhaul that Social Security urgently requires is still a distant dream, given the shortsighted, risk-averse lawmakers now in Congress. But one day the need to save Social Security from fiscal disaster will become an emergency that even Washington can't ignore. That will present an opportunity to gradually reduce benefits for middle- and upper-income retirees and restore the program's original goal of saving Americans from an impoverished old age.
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