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  #71  
Old 07-24-2018, 11:04 PM
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ILLINOIS

https://www.bna.com/illinois-secure-...-n73014477728/

Quote:
Illinois Secure Choice Retirement Plan Could Face Legal Challenge

Spoiler:
At least one industry association is considering litigation against Illinois as the state pushes forward with its Secure Choice retirement savings program, which imposes new payroll and reporting duties on all but the smallest employers.

Other legal challenges to Secure Choice could follow when the program launches Nov. 1, sources told Bloomberg Law.

Libertarian and anti-tax advocacy organizations challenged a similar retirement program in California, suspicious of safety net programs administered by the state. And some employer groups are uneasy with compliance burdens and program features that potentially conflict with the Employee Retirement Income Security Act. Last year, President Donald Trump signed a resolution repealing an Obama-era Labor Department “safe harbor” rule that specified state-sponsored Secure Choice schemes are exempt from coverage under ERISA.

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“The big obstacle is going to be the lack of federal legislation that frees these plans from ERISA complications,” said Andrew S. Williams, an employee benefits and ERISA partner with Golan Christie Taglia LLP in Chicago.

But supporters of Secure Choice, which aspires to bring 1.2 million Illinoisans into retirement savings vehicles for the first time, insist the ERISA complaints are overblown.

“We have always maintained that Secure Choice employers are not subject to ERISA,” said Jody Blaylock, a financial security policy associate with the advocacy group Illinois Asset Building Group. “While the safe harbor was a helpful clarification, we always believed—with or without—Secure Choice is in good standing.”

State Treasurer Michael W. Frerichs, who is administering the program, said “we have always been aware of the potential for a lawsuit, or that a lawsuit is likely. But we feel confident we are on solid legal footing, and just because someone files a lawsuit doesn’t mean it has merit.”

First in the Nation
In January 2015, Illinois was the first state in the country to enact a Secure Choice program. Since then, California, Connecticut, Maryland, New Jersey, Oregon, Vermont, and Washington have passed their own state-facilitated retirement savings programs. Oregon’s program is the only one that is fully operational.

Under Illinois’ program, employers at least 2 years old and with at least 25 workers must either offer their own retirement program or participate in Secure Choice. Employers in Secure Choice would facilitate payroll deductions into each worker’s Roth IRA-style retirement account. Employers aren’t permitted to contribute funds to a worker’s account.

Each new account would be set up to accept 5 percent of an employee’s paycheck, but workers would be free to change their contributions or opt out. Accounts also would travel with workers as they move to different jobs.

Illinois has specific deadlines by which employers must register for Secure Choice. The state’s largest employers, with 500 or more workers, must register by Nov. 1. Employers with between 100 and 499 workers must register by July 1, 2019, and employers with 25 to 99 workers must register by Nov. 1, 2019. Illinois will notify employers directly about the registration requirements, including information about available exemptions.

Illinois signed a nine-year deal with Ascensus, the nation’s largest retirement and college savings service provider, to manage the program. The state recently launched a pilot program involving eight employers with headcounts ranging from 40 to 800, Frerichs said.

Industry Group Lawsuit?
The ERISA Industry Committee (ERIC) already has sued Oregon’s program, OregonSaves, and is considering similar action in Illinois.

Will Hansen, ERIC’s senior vice president of retirement and compensation policy, said his group supports Secure Choice programs, but Illinois is implementing its reporting requirements in ways pre-empted by ERISA. He said the state is requiring employers to check a box in their quarterly IL-941 Form, the Illinois Withholding Income Tax Return, indicating whether they are subject to the Secure Choice statute.

“We still think it’s a reporting requirement. We still think it violates ERISA. We are currently weighing our options on how to approach the Illinois issue,” Hansen said.

Oregon’s reporting requirements were less onerous but nonetheless pre-empted, leading ERIC to file a lawsuit in federal court. The parties reached a settlement in March permitting employers to verify their membership with ERIC to confirm their exemption from OregonSaves. The parties also agreed to work with federal regulators to seek changes to existing reporting forms required under ERISA that can provide Oregon with the exemption information.

Existential Challenge
Illinois could face an existential challenge from taxpayer groups questioning the purpose and necessity of the program.

California was sued in May by the Howard Jarvis Taxpayers Association, which argues the “CalSavers” Secure Choice program is facially invalid under ERISA. A spokeswoman for the HJTA said taxpayer groups in Illinois may adopt a similar strategy in light of the state’s huge unfunded public pension systems.

“In California, we already have several pension programs managed by the state that are not managed well at all,” said Susan Shelly, vice president for communication at HJTA. “And the last thing that’s needed is to automatically enroll working people into some sort of program for an IRA, when they could go down the street to any one of the financial services companies that already market to consumers and small investors.”

In this uncertain climate, Williams predicted a period of heartburn for Illinois employers.

Even if Illinois satisfies the concerns of ERIC and taxpayer groups, the state may run up against the Labor Department and its interpretation of ERISA. He said Illinois employers without exempt retirement plans might be better served by avoiding Secure Choice altogether, and establishing their own 401(k) plan.

“Unless there is some real clarity on the federal level, these plans present a definite risk component to private employers who might think about adopting them,” Williams said. “My guess is that’s not going to get better in the Trump Administration.”


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Old 08-01-2018, 01:42 PM
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https://www.forbes.com/sites/ebauer/.../#475577154486
Quote:
Three Worries About State Auto-IRA Programs
Spoiler:
Are state-run autoenrollment IRA programs a solution, however partial, to Americans' unpreparedness for retirement? For the uninitiated, these are programs -- already in effect in Oregon as OregonSaves, and with implementation underway in California, Connecticut, Illinois, and Maryland -- in which employers who do not offer their own 401(k) or similar retirement savings program must enroll their employees in a state-run IRA, with individual employees able to opt-out if desired. Contribution levels are fixed at 5% in Illinois, start at 5% and auto-escalate to 8% in California, and auto-escalate from 5% to 10% in Oregon.

I made some initial comments on these plans last week, but haven't otherwise had much to say about them, even though a fuller discussion has been in my article queue since I started writing on the Forbes platform.

Here's why: I worry.

Are my worries objective? Have I identified problems that necessitate significant changes in these programs, lest they do more harm than good by means of unintended consequences? Or am I falling into the trap of "letting the perfect be the enemy of the good," that is, by rejecting out-of-hand programs that can provide real benefit to people? (that is, while not getting ahead of myself and thinking that my comments will be a significant driver of public opinion). That remains to be seen.


But with that preface, here we go:

Worry #1: The Blago Factor

Illinois residents will perhaps nod in recognition. For the rest of my readers, here's what I mean:

Prior to typing this paragraph, I typed into Google, "list of Illinois governors who" -- and its first suggestion completed the phrase as "went to jail."

MORE FROM FORBES
Here in Illinois, corruption is bipartisan.

I moved to Illinois in 1996. In 1998, George Ryan was elected governor. In 2003, after his second term in office ended, he was indicted for running a commercial driver's license bribery scheme while Secretary of State, a scheme for which he was sentenced to six and a half years in prison. In 2003, Rod Blagojevich was elected (the Republicans having had the misfortune of nominating a candidate named Jim Ryan, and losing votes in part due to voter confusion). In December 2008, Blago was charged with corruption; in January 2009, he was impeached; and in 2011, he was sentenced to 14 years in prison. Columnist John Kass has called it The Combine, the bipartisan practice of self-enrichment, at the expense of taxpayers.

Yes, I know that not all states have quite the same record of corruption. (I grew up in the Detroit suburbs; I used to say, upon moving to Illinois, "look, I'm used to big-city corruption, but I'm not used to state corruption.") Yes, I know that these plans are comparable to 529 college savings plans with respect to the role of the state, and there seem to have been no pay-to-play scandals surrounding those plans.

But there's an awful lot of money at stake, whenever a state picks a single investment/administration firm to run its system. Yes, states are supposed to select the winner based on appropriate objective criteria. And I'm sure that most such state treasurers and other government officials are professionals who pride themselves on their ethical standards, but even where there's not a direct kick-back, those officials may still end up intervening by playing politics with excluded or preferred investments.

So it may be a wholly irrational worry, but it's a worry nonetheless.

Worry #2: Inappropriate levels of investment risk and fund expenses

In Illinois, all contributions will be invested in target-date funds as a default. (These are funds in which the relative degree of equities, and investment risk, decreases as one grows older, with the "target date" referring to the targeted retirement date.) In Oregon, the first $1,000 is invested in a money market-type fund, and additional contributions are invested in a target-date fund. California's investment policy statement takes the same approach. Of course, any participant is able to change their allocations to a higher or lower risk fund or, in the case of California, into an Environmental, Social, and Governance (ESG) Fund.

With respect to fees, these programs are all designed to be entirely self-funding, which is an improvement on early versions of the California design in which the state promised a guaranteed investment return. The Oregon program charges a fee of approximately 1% of assets. According to a Pew analysis, this is not wholly unreasonable, if compared to the sorts of 401(k) plans that small businesses might otherwise be able to offer, which, due to the lack of volume, have higher expenses. At the same time, according to this same analysis, the largest portion of the fee is the administrative cost:

The various funds will charge 6 to 13 basis points, which are competitive fees when compared with those of index mutual funds. State overhead will account for 5 basis points, and the majority of the fee—85 basis points—will go to Ascensus, the private financial firm administering the program.

But what if participants end up using these programs as short-term savings? After all, the practice in Oregon, and planned for California, of leaving the first $1,000 in safe investments, implies that this is expected to happen reasonably often. And the Illinois website pragmatically anticipates this happening with the first sentences in its section on withdrawals/distributions:

You can withdraw money from your Illinois Secure Choice account by requesting a distribution.

While the program is meant to help you save for retirement, we understand that life’s unexpected moments sometimes come with a price. What you do with your savings is entirely up to you, and the money you save is available to you if you need it in an emergency.

It's true that with a Roth IRA, participants are reasonably protected from serious tax penalties for early withdrawal. But a short-term saver nonetheless pays a penalty -- where the money is invested in money market-type funds, they will actually lose money with an asset return level that's lower than the fee that's charged, and where the money is invested in the default target-date fund, they are at risk of loss in market downturns.

Worry #3: Insufficient financial literacy

How much will the participants in these plans actually understand about their accounts, and about retirement savings?

Early in July, the program announced updated figures, in which 72.5% of employees have remained in the program, down from January of this year, when 80% of employees remained, due to the addition of employees from smaller businesses. (In May, the participation requirement took effect for businesses with 50 - 100 workers, in December, employers with 20 employees will be roped into the mandate, and in 2019 - 2020, all even smaller businesses will be required to participate.) Of these participants, the average contribution is 5.14% of pay.

How many of these new savers actively engage with their accounts, learn about their investments, understand their choices, track their balances? How many of them are vaguely aware that they have a new deduction, but that's about it?

The OregonSaves website provides what it calls a "retirement calculator" in which it projects a savings rate, income, current age, and retirement age into a current-dollar projected retirement income, based on an assumed life expectancy of 90. But it doesn't provide any means of interpreting that number, particularly in light of Social Security benefits. In a page titled, "Why is saving now so important?" the site compares prices of products 20 years ago to the present, and tells readers that they can only count on Social Security to provide 34% of their retirement income. And "Retirement Savings 101" tells readers that saving for retirement is a matter of making "easy lifestyle changes." Similarly, the Illinois site recommends brown-bagging lunches, dropping cable for online streaming, or dropping a landline, and uses the same retirement calculator, a calculator whose math, incidentally, I was unable to verify (nor did I receive a reply to my inquiry as of publication of this article) but seemed suspect.

None of this goes very far to assuage Andrew Biggs' worry that these savers will end up in debt. It seems likely that most of these new participants cannot simply forego a few luxuries, because they don't have luxuries to forego. I see nothing in these programs that distinguishes the needs of low-income workers from those who are middle-income but financially lackadaisical.

So there you have it: three worries, no real conclusion as of yet as to whether the overall idea of these programs is fundamentally sound and the worries, simply risks that have to be taken to achieve a sound long-term retirement program. Which means all I can promise for the moment is "watch this space" -- for updates, that is, as more information becomes available.
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  #73  
Old 08-02-2018, 06:28 PM
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CALIFORNIA
LAWSUIT

http://www.latimes.com/business/la-f...730-story.html

Quote:
State officials fire back at anti-tax group over lawsuit targeting new California retirement plan
Spoiler:
California officials have asked a federal judge to dismiss a lawsuit that seeks to scrap the state’s plan to offer basic retirement savings accounts to millions of workers, saying the anti-tax group that filed the suit has no case and that the plan is legal under federal law.

In a filing in Sacramento, attorneys for the state attorney general and treasurer said the Howard Jarvis Taxpayers Assn. cannot argue that it has been harmed by a program that is not yet operating.

The program, called CalSavers, would require all but the smallest employers to offer a state-sponsored retirement savings account if they do not offer their own pension or 401(k) plan. Created by a state law passed in 2016, the program would provide retirement accounts to an estimated 6.8 million California workers.

The taxpayers association does not offer a pension or 401(k) to its employees and would have to offer CalSavers, a move the association argued in its May lawsuit would subject it to “undue burden.”


BUSINESS
California created a savings program for workers without retirement benefits. A group is suing to kill it
MAY 31, 2018 | 4:00 PM
It also argues that the savings plan would qualify under federal law as an employer-sponsored retirement plan, forcing the association and other employers to follow the same rules and accept the same liability as companies that opt to offer their own retirement plans.

CalSavers isn’t expected to start enrolling participants until later this year. The smallest employers, including the taxpayers association, would have until 2022 to comply. Until then, the association can’t show it has been harmed and should not be able to sue, attorneys for the state said in last week’s filing.

The state also took a poke at the Jarvis group, arguing that by 2022 the association might not exist, have enough employees to have to offer the program or “have continued its present policy of denying its employees a retirement plan.”

The state further argues that CalSavers would not face the same liabilities as an employer-sponsored plan, with its only responsibilities being to help workers sign up and make payroll deductions.

Jon Coupal, president of the taxpayers association, said he believes his group has the right to bring a case because, even if workers are not yet enrolled in CalSavers, the program exists, has a staff and is moving forward.

“They’re spending taxpayer dollars and putting out videos,” he said. “They fully intend to implement this program. You don’t wait for a rattlesnake to bite you before you kill it.”

A hearing on the state’s motion to dismiss is set for Sept. 6.


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Old 12-10-2018, 06:44 AM
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CALIFORNIA

https://spectator.org/californias-la...ension-hubris/

Quote:
California’s Latest Pension Hubris
State’s mini-Social-Security program is gearing up, but it’s real goal is to battle “pension envy” rather than to help Californians secure a retirement.
Spoiler:
California officials have an incredible knack for proposing dubious, government solutions to problems that don’t actually exist, while ignoring the real problems that are under their purview. The best example, perhaps, is the $100-billion high-speed rail project that will be far slower and costlier for consumers than our existing means of statewide high-speed travel (i.e., Southwest Airlines). The state is moving forward with that boondoggle — undaunted by continuous delays, engineering conundrums, cost overruns, and an obvious lack of demand for a new rail line.

But a close runner up is an unnecessary retirement program for private-sector workers that state officials are now unveiling on pilot-project basis. “Any employer with at least five employees that doesn’t already offer a workplace retirement savings vehicle will be required to either begin offering one via the private market or provide their employees access to CalSavers,” according to the description from the state treasurer’s office.

Note the word “required,” despite its supporters’ claims that the program is totally voluntary. Employees can opt out, but employers cannot. That five-employee requirement captures the bulk of California’s small businesses, which means yet another regulatory and bookkeeping requirement, even if the state promises that the program is cost free. The $170 million in a taxpayer-provided startup loan might not be much by California budget standards, but this may be just the beginning. And for what?


California workers already are eligible for Social Security. That system’s a mess, of course, but it won’t become any less messy by having the California government create its own facsimile of it. Furthermore, any Californian who works for a company that does not offer a 401(k) saving plan is free to open their own retirement account and enjoy the many tax advantages the federal government offers. A lack of retirement savings is a legitimate policy concern, but there are plenty of options available for anyone who has the desire to begin saving for the future.

Meanwhile, the state’s own public-sector retirement system is reaching crisis levels. What can go wrong by inserting the state into the management of retirement plans for California’s private workforce even as its own government-managed plans amass hundreds of billions of dollars in public debt? State lawmakers haven’t addressed falling funding levels and growing unfunded liabilities for years, even as they vote in favor of creating a single-payer healthcare system that would cost, by the Legislature’s own conservative estimates, more than the entire state budget. More of the same.

Formerly known as Secure Choice, the rechristened CalSavers program would automatically deduct 5 percent of the employee’s wages and place it in a choice of various money markets and various stock and bond funds. The state will select the investment companies that will be among the handful of choices, which has raised the obvious concern about the government picking winners and losers. Savers will pay fees of up to 92 cents on every $100 invested.

The potential problems are legion. In a 2016 letter to the state treasurer, the Securities Industry and Financial Markets Assn., a Wall Street trade group argued that “before developing a complex and costly state run retirement savings structure that competes with the private marketplace, we would encourage you to more fully explore whether this program would assist the 29 percent of uncovered workers who… are not currently saving or would instead simply take people from their existing savings plan and place them in a plan run by the state.”

In other words, CalSavers might simply compete with already existing funds and encourage employers who currently offer retirement programs to shift to the publicly run alternative. The group and other critics also fear that the cost of running the program will be higher than the government suggests and that 71 percent of Americans already are saving for retirement. I know it’s shocking that the government might understate the burdens on taxpayers and private businesses — and overstate the need for a new government program.

Others, such as Howard Jarvis Taxpayers Association President Jon Coupal, noted that “there is the risk to taxpayers in the event Secure Choice goes bankrupt. Defenders claim that this can’t happen, but remember that officials in Stockton, Vallejo and San Bernardino once said the same thing.” These kind of programs do have a tendency to grow beyond their initial promises.

And it’s hard to be reassured by Treasurer John Chiang’s promise that “CalSavers won’t cost the state or taxpayers a single dime, nickel or penny.” If I could have a penny for every time a government official made that promise, I wouldn’t need to be saving for retirement. Remember when state officials promised that a 50-percent pension-increasing law in the late 1990s wouldn’t cost taxpayers a dime? It didn’t. It cost them billions of dollars.

Meanwhile, the Jarvis group has filed suit against the new program. As the Los Angeles Times explains, the group argues that “the program amounts to an employer-sponsored retirement plan. If that’s the case, CalSavers would be governed by a federal retirement savings law that saddles employers with administrative and compliance costs.” Given the seriousness of that argument, it would be wise if the state would let the courts resolve the issue before rolling it out even on a trial basis. (The program is available for all employers in July and its requirements take hold in 2020.)

As I wrote for The American Spectator, this concept got legs when exploding pension debt to pay for six-figure retirements for California’s public employees (and all the associated pension-spiking gimmicks and crazy payouts) were front-page news and a pension-reform movement was growing. “(I)t is not hard to see why we are dealing with a very serious and virulent strain of pension envy,” then-Treasurer Bill Lockyer, a union ally, said at a retirement conference in 2011. “What I’m thinking is that it would be a very smart political and policy move by those who want to keep defined-benefit public pensions to link the move for pension reform to a demand for a meaningful retirement-security option for California private-sector workers.”

In the past seven years, the state’s pension debt has grown even as the public retirement systems enjoyed impressive returns. The state passed one modest pension-reform law in 2012 that was mostly about politics, as Gov. Jerry Brown feared that concern about wealthy state pensioners would endanger a ballot initiative that would raise taxes to close a budget hole. But beyond that we’ve heard virtually nothing about a financial crisis that is crowding out public services and leading to talk about municipal bankruptcies. Instead, we get a new state-controlled retirement system for the private sector, because every non-problem needs a government solution and every real government-caused problem should be ignored.


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Old 12-11-2018, 01:34 PM
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https://www.wsj.com/articles/states-...gap-1544284801


Quote:
States Boost Access to Retirement Plans, Seeking to Close Savings Gap
California and Illinois launch government programs to shore up households financially under-prepared for retirement
Spoiler:
Two of the nation's most populous states have introduced programs to bring retirement-savings plans to residents who don't have access to one at work. The move escalates government efforts to reduce the retirement-savings shortfall in the U.S.

Last month, Illinois and California began requiring employers that don't offer retirement plans to give employees access to state-sponsored savings vehicles, by automatically enrolling them in individual retirement accounts invested in mutual funds. Employees are free to opt out.

The goal is to help shore up the roughly half of American households whose standard of living is at risk of declining after retirement, up from 45% in 2004, according to Boston College's Center for Retirement Research.

The shortfall is due to factors including insufficient savings rates, low interest rates, rising debt levels and the gradual increase in the age at which people can claim full Social Security benefits.

The state initiatives have "the potential to create a culture of saving among workers who haven't had a lot of experience with the standard retirement-savings system," said John Scott, director of the Pew Charitable Trusts's retirement-savings project. Many are younger and lower income than the typical 401(k) participant, he said.

Oregon launched a similar program in 2017 and six other states -- including New York, Connecticut and Maryland -- and the city of Seattle are working on their own.

Some states, including Vermont and Washington, have enacted programs using other models that avoid coverage mandates, and several others are exploring legislation to authorize retirement-savings programs.

Proponents say they are concerned about the estimated 42% of private-sector workers who either don't have access to or don't participate in a workplace retirement-savings plan, many of whom don't save at all.

State legislators say they are trying to save taxpayers' money by reducing retirees' reliance on public programs such as Medicaid.

Critics point out that if the programs don't gather enough assets to reimburse the states for startup costs, they will leave taxpayers on the hook.

The programs could also be hobbled by a lawsuit seeking to invalidate California's initiative on the basis that it violates federal pension laws. The suit was filed by the Howard Jarvis Taxpayers Association, a nonprofit advocating limited taxation.

"It's an unsettled area of law," said Michael Kreps, a principal at Groom Law Group. "We are watching the case closely."

In Illinois, companies with 25 or more workers that lack a retirement-savings plan must make Illinois Secure Choice available to their employees by November 2019.

Keely Selko, office manager at Chicago restaurant the Dearborn, said she would have been happy to see 10% of the roughly 125-person workforce enroll in the Illinois program during its pilot period this summer.

"If, while people work for us, we can do something to help them think about retirement, that's a win," said Ms. Selko, who says 30% of her employees are saving.

Clara Lee, a 33-year-old sous chef, said she started contributing 5% of her pay to the Illinois program in July and has accumulated $700 so far.

The Chicago resident said the experience has inspired her to refinance her debt at a lower interest rate and eat more meals at the restaurant to save more.

Recently, she increased her contribution rate to 7%.

California's program, called CalSavers, launched in late November.

Now, in a pilot phase, that program will be required of employers with five or more workers that don't already offer a plan by 2022.

Under OregonSaves, employers with 50 or more workers are already required to enroll employees, with smaller companies slated to join by 2020.

All three programs deduct 5% from workers' paychecks, and employees can opt out or change their saving rate.

Employers are barred from making contributions to the IRAs.

About 10.4 million residents of the three states lack access to retirement-savings plans at work, according to AARP, the advocacy group for older Americans and a supporter of state-run retirement-savings programs.

Kevin Cox, head of government savings at Ascensus LLC, administrator of the three states' programs, predicts state-backed retirement plans will be as successful as 529 college-savings plans, which started in the late 1990s and now have about $329 billion in 13.6 million accounts.

"There is a lot of long-term potential," said Mr. Cox, who oversees Ascensus's 529 business, which has more than $100 billion in assets under administration.

Feasibility studies for the programs project CalSavers could amass $28.4 billion in assets within six years and Oregon and Illinois could reach $5 billion and $10 billion, respectively, within a decade.

Ascensus -- which charges up to a 0.75% annual fee -- has a 10-year contract in Oregon and seven- and nine-year agreements, respectively, in California and Illinois.

It has agreed to cut its fee in California and Oregon when assets reach specific thresholds.

Ascensus operates websites in the three states to enroll participants and track their savings and expects to hire a couple of hundred call-center workers in the next few years, Mr. Cox said.

"We launched OregonSaves last year and did not expect to make money in the first couple of years," he said. "We are pretty much on schedule."
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Old 12-28-2018, 12:08 PM
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OREGON

https://www.benefitnews.com/news/ore...c25f6a50415ce9
Quote:
Oregon calling on other states to roll out retirement plans

Spoiler:
Early adopters of state-run retirement plans are calling other states to follow suit and start rolling out some variation of a model that offers workers a savings plan when none is available through their employer.

Oregon was the first state to get its retirement plan up and running, and the official who leads that program is hoping that the model will take off as other states grapple with the challenge of getting more workers to save for retirement.

"While we work in the state of Oregon, we know that this is a movement," Michael Parker, executive director of the Oregon Savings Network, said at a recent event hosted by Georgetown University's Center for Retirement Initiatives. “We want to be part of that movement; we really want to get it out there.”

"We want to do everything in Oregon to make sure that other states have this opportunity," Parker said.

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More than 40 states have introduced proposals to set up some kind of public option for retirement savings, according to the Georgetown center, which has been tracking those efforts. To date, 10 states and one city (Seattle) have set up their programs, and three states are actively enrolling workers.

For plan advisers, those state-run programs can be a mixed bag. On the one hand, driving up enrollment in retirement plans could create new opportunities for advisers. However, some industry groups such as the National Association of Insurance and Financial Advisors worry that the government plans will be in direct competition with private offerings, and are opposing state-run plans. State officials, for their part, reject the notion that their plans are a threat to the private sector, arguing that their singular goal is to get more people to save, and if that happens through more attractive private plans, so much the better.


The programs vary in details such as which businesses will be compelled to offer workers a state-run plan or a satisfactory private alternative, but all come in response to the concern that too many Americans aren't saving enough for retirement, and that the most effective way to encourage them to put money away is through a plan at work.

In Oregon, officials are gradually phasing in the program, but by 2020, every business in the state will be required to automatically enroll workers in the OregonSaves program or some other qualifying plan.

California and Illinois have their own plans coming online this year, each poised for a gradual rollout through which they hope to strengthen the retirement safety net.

"This is [a] pretty major cultural shift that we are all setting out collectively to effectuate, and it's going to take time," said Katie Selenski, executive director of the CalSavers program. "We're trying to reach double digits millions of people and really shift the paradigm of how people think about their financial lives both employers and employees."

Experts have observed that other states appear to be closely watching the rollouts in Oregon, California and Illinois before moving forward with their own retirement plans.

In Oregon, Parker is positioning his program not only as a model for other states to follow, but opening the door for other states to come in as partners and use some of the infrastructure that his office has built to get their own plans up and running.

"[i]f there are states out there who necessarily don't have the means, the resources, the human capital to start one of these programs, but would like to do it in their state, we do offer some kind of collaboration where states can come on, essentially have a program that just operates off the Oregon rails," Parker said. "We're going to be very successful around the country if as many folks as possible are taking advantage of these programs."



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Old 01-14-2019, 06:24 PM
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NEW YORK CITY

https://www.pionline.com/article/201...14#cci_r=73393

Quote:
New York mayor proposes city-managed IRA for private-sector workers

Spoiler:
New York City Mayor Bill de Blasio has proposed creating a city-managed individual retirement account program that would aid private-sector workers whose employers don't offer retirement savings plans.

"Nearly half of the workforce in this city, 2 million of us, don't have employer-sponsored retirement plans," Mr. de Blasio said Thursday during his annual state of the city speech. "So we're going to establish retirement plans for any worker who doesn't have one."

The proposal, which must be approved as legislation by the City Council, is similar to so-called secure choice programs now being offered or being developed by several states, including Oregon and California. If legislation is approved this year, the program could take effect in 2021, according to a fact sheet issued by the mayor's office. The mayor's proposal says:

RELATED COVERAGE
Group sues to kill California Secure Choice programSeattle mayor proposes secure choice programIllinois governor proposes making Secure Choice retirement program optional for employersNew Jersey lawmakers pass Secure Choice legislation New York state creates voluntary retirement savings program
• Employers with at least five employees that don't offer a retirement plan will be required to auto-enroll their employees into the city-sponsored plan with a 5% of salary default contribution.

• The contribution works as a payroll-deduction into a Roth IRA, and it can be transferred if participants change jobs.

• Employees can opt-out at any time and can reduce or increase contributions up to the annual Roth IRA maximum, which is $6,000, or $7,000 for people 50 and older, for this year.

Employers won't contribute to this program, Raul Contreras, a spokesman for Mr. de Blasio, said in an interview. Although the city will pay for start-up costs, the program will be maintained by fees charged to participants' accounts.

This Retirement Security Fund will be governed by a board of directors, managed by a private third-party administrator and provide low-cost index mutual funds for the investment menu, the fact sheet said.

Mr. de Blasio's proposal differs from legislation signed into law in April 2018 by Gov. Andrew Cuomo establishing a Secure Choice Savings program for New York state in which participation by both workers and employers is voluntary. Depending on adequate funding, the New York state program is expected to take effect in the spring of 2020.

Mr. de Blasio's proposal is similar to one he offered in 2016, but he didn't pursue it when President Donald Trump rescinded regulations issued during President Barack Obama's administration that said state- and municipal-run IRA programs would not be subject to the Employee Retirement Income Security Act. Several states have taken steps to account for the loss of the ERISA-exemption rules. There's also legislation in the City Council — introduced in August 2017 and reintroduced in May 2018 — that is similar to Mr. de Blasio's proposal. It contains the auto-enrollment Roth IRA features, the opportunity for employees to opt out and the requirement that employers enroll their workers. This bill covers employers with more than 10 workers and sets the initial default contribution rate at 3% of salary.


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