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Old 04-19-2016, 02:32 PM
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Mary Pat Campbell
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Default State-run private pensions

I've been ignoring this as long as I could, but I suppose California may actually do it (I've seen failed bills elsewhere):

http://city-journal.org/html/califor...ris-14401.html

Quote:
Instead of addressing the estimated $600 billion in unfunded liabilities in California’s beleaguered public-employee pension system, Democrats in Sacramento have instead decided to “solve” a growing pension crisis in the private sector. In 2012, Governor Jerry Brown signed a measure that created an investment board and authorized a “feasibility study” of various options for a state-backed private-pension system. That study came out last month, and the legislature is now vetting bills that would put its recommendations into action.

The plans under consideration would mandate participation in the new state-run retirement system for firms with five or more workers, though the workers themselves could opt out. Employers that don’t comply would face fines and other penalties. They would automatically deduct 3 percent to 5 percent of each employee’s earnings (the exact percentage is not yet determined) and deposit the money in an IRA, likely managed by the California Public Employees’ Retirement System (CalPERS)—the same union-controlled government entity that uses its investment muscle to promote liberal causes. Unlike the public-employee pension plans (or even Social Security), however, the envisioned private-pension system is a 401(k)-style, defined-contribution plan. It could not accumulate unfunded liabilities, at least in its current design.
....
The obvious rebuttals: workers do have access to such plans in the private sector, and it’s not the government’s job to create such a program. Low-income earners might not be thrilled to see their paychecks decline by 5 percent if the new proposal takes effect. Additionally, employers would face unexpected costs and red tape. The plan would almost certainly lead private employers with their own pension programs to dump their workers onto the new state system. And a government-administered pension system would likely crowd out private companies that manage and sell 401(k) investments.

The state’s public-sector unions backed Brown’s bill. As it turns out, union-friendly politicians hatched the private-sector pension plan a few years ago as a way to deflect attention from the public system’s massive unfunded liabilities. The idea was to give private-sector workers some modest benefit as a way to dampen public support for pension reforms.
If that's the goal, I really don't see that as working.
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Old 04-19-2016, 02:34 PM
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here's the California feasibility study:
http://www.treasurer.ca.gov/scib/report.pdf

Quote:
Executive Summary

This Final Report represents the culmination of many months of collaboration between
Overture Financial and its sub-contractors, the Board, California Secure Choice personnel and
contractors, stakeholders in the public and private sectors, service providers, employers and
employer associations, worker organizations, and community groups.

We are pleased to provide this report as an actionable document that can contribute to the
successful launch of the California Secure Choice Program, to the retirement security of
millions of Californians and to the spread of similar programs across the nation.
The scope of work under the Contract consists of three work streams: market analysis,
program design and financial feasibility study. The key findings and recommendations for
each of the work streams are summarized below.

Market Analysis

The Market Analysis work stream consists of four parts:
(1) A market profile outlining the economic and demographic characteristics of the
eligible workforce, both at the individual worker level and at the household level.

(2) Six focus groups with eligible workers—two conducted in Spanish and four conducted
in English—to provide a qualitative assessment of the target population’s attitudes and
preferences with regard to program features, auto-enrollment, auto-escalation, and
investment risk.

(3) An online survey of 1,000 eligible workers designed to yield reliable estimates of optout
and contribution rates and gauge attitudes toward retirement savings, investment
risk, liquidity and account access.

(4) Stakeholder interviews with employers and business groups, worker organizations,
and consumer organizations to identify key concerns and suggestions regarding the
design, rollout and implementation of the Program.

The key findings are the following:

(1) About 6.8 million workers are potentially eligible for the California Secure Choice
Retirement Savings Program.

(2) Likely participation rates (70-90%) are sufficiently high to enable the Program to
achieve broad coverage well above the minimum threshold for financial sustainability.

(3) Eligible participants in California are equally comfortable with a 3% or 5%
contribution rate. The vast majority of likely participants are also comfortable with
auto-escalation in 1% increments up to 10%.

(4) To start, the program should offer a default investment option consisting of a
diversified portfolio with long-term growth potential and the choice to opt into a lowrisk
investment.
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Old 04-19-2016, 02:37 PM
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This one is old:

ILLINOIS

http://www.nytimes.com/2015/01/06/up...tion.html?_r=0

Quote:
Illinois Introduces Automatic Retirement Savings Program, a First for the Nation

Illinois is taking a novel approach to getting its residents to save for retirement. Starting in 2017, most state residents with jobs who don’t already have a retirement plan at work will be automatically enrolled in individual retirement accounts, funded through a 3 percent deduction from their paychecks.

The program will be created under a law signed by Gov. Pat Quinn on Sunday. Participation will be voluntary, but workers who don’t want to save will need to opt out manually. (They will also be allowed to save more than 3 percent if they wish.) An estimate produced by the plan’s backers found that up to two million of the state’s residents may end up with the accounts.

The plan, called Secure Choice, aims at a gap in America’s retirement saving system: Employer-based savings plans are supposed to be an important source of Americans’ retirement income, but large employers are far more likely to offer such plans than small ones. The plan is similar to one President Obama has advocated at the federal level, and if it is successful in getting more people to save, it may end up being a model for other states and the federal government.

http://www.progressillinois.com/post...illion-workers

Quote:
Saving for retirement could get much easier for more than a million private-sector Illinois workers next year under a first-in-the-nation state program that is in the works.

The initiative is called the Illinois Secure Choice Savings Program. Through the program, signed into law (SB 2758) by former Illinois Gov. Pat Quinn in January 2015, workers at businesses in operation for at least two years with 25 or more employees must have access to an individual retirement savings account through their employer by June 2017.

Such eligible workers can participate in the state's Secure Choice program and build retirement savings through a 3 percent payroll deduction. Workers covered by the measure are allowed to opt out of the program or reduce their payroll deductions if they choose.

.....
State law prohibits the Secure Choice program from being implemented if it is found to be covered under the Employee Retirement Income Security Act (ERISA) of 1974, which regulates most private-sector employee pension and health care plans.

That provision was worked into the law to ensure employers would not be forced "into a position where they had to enroll employees, and then comply with all these burdensome ERISA requirements," Cowan said, explaining that "a lot of paperwork" and "legal requirements" are required for ERISA-covered plans.

New regulations proposed by the U.S. Labor Department in November, however, would let state savings arrangements like the Secure Choice program move forward without being subject to ERISA. Specifically, employers required to enroll employees as part of Secure Choice and similar state programs would be exempt from ERISA's requirements under the Labor Department's proposal, which still needs to be finalized.

The program's startup costs, meanwhile, were estimated between $15 million to $20 million in a fiscal note from the treasurer's office that accompanied the Secure Choice legislation.

.....
Under the law, the board could delay the program's implementation if adequate startup funds are not obtained by June 2017.


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Old 04-19-2016, 02:38 PM
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http://www.pensionrights.org/issues/...private-sector

Quote:
States around the country are looking into ways of using the efficiencies of public retirement systems to administer new types of pension plans for private-sector workers. Below are brief summaries of plans that have either passed or are being considered.

In addition, AARP’s Public Policy Institute has established a State Retirement Savings Resource Center, a library of policy papers, key facts, opinion pieces, and studies related to state-based plans for private-sector workers. The Pension Rights Center authored two papers -- one on consumer protections in such plans and one on the advantages of pooled accounts.

In September 2015, the Government Accountability Office published a report, Federal Action Could Help State Efforts to Expand Private Sector Coverage, which looks at coverage rates, efforts by states and other countries to expand coverage, and the obstacles states face in implementing new state-based plans.

- See more at: http://www.pensionrights.org/issues/....MuFEpApv.dpuf
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Old 04-19-2016, 07:12 PM
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Quote:
Originally Posted by campbell View Post
http://www.pensionrights.org/issues/...private-sector
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the efficiencies of public retirement systems
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Old 04-19-2016, 07:31 PM
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new york (both state and city) have proposed something as well.

I can't see that they will work as voluntary options, lots of easy choices already exist in the market. so they will end up being "temporarily" subsidized by general revenues until they "reach scale". in other words, a boondoggle.

Of course, the state could mandate them on the theory that small employers won't move away or close due to the increase in marginal cost of labor.
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Old 04-19-2016, 09:27 PM
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Well, none of these are in effect. yet.

I don't think Illinois will actually do it. California may run into other issues, like a whole bunch of ex-low-wage workers who are now unemployed.

So we will see
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Old 05-11-2016, 08:58 PM
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MARYLAND

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Quote:
With time running out on its 2016 legislative session, the Maryland House has passed the state’s auto-IRA bill by a veto-proof majority.

That, coupled with the unanimous vote in support by the Old Line State’s Senate earlier in the week, makes it almost a foregone conclusion that Gov. Larry Hogan (R) will not bother vetoing the legislation, which would establish the Maryland Small Business Retirement Savings Program.

What’s in the Bill

The legislation is the product of stakeholder deliberations that have been taking place in Maryland over the course of the past few years. In 2014, then-Gov. Martin O’Malley (D) created the Task Force to Ensure Retirement Security for All Marylanders. The task force, chaired by former Lt. Gov. Kathleen Kennedy Townsend, issued a report in February 2015 that amounted to a call for state action to address the retirement plan coverage gap in the private workforce, but was light on specifics.

In September 2015, the leaders of the Maryland General Assembly created the Commission on Maryland Retirement Security & Savings to drill down on the real reasons small businesses were not offering retirement plans for their workers.

As for the reach of that legislation, if the employer meets the requirements in the legislation – namely that the business adopts or maintains either an auto-IRA program or a full blown employer-sponsored retirement plan – then their annual reporting fee ($300 in most cases) is waived. The bill, which applies only to employers with 10 or more full-time employees that use an automated payroll system or service, also creates a state-run auto-IRA program that businesses can use as an option to meet the requirements.

Other State Initiatives

In recent years, state governments have become focused on increasing access to retirement plans for private sector workers. Maryland is the latest state – behind Illinois, Massachusetts, and Oregon – to pass similar legislation in the past few years, including Washington State, which launched a small plan marketplace last year, an approach recently embraced by New Jersey.

Furthermore, California and Connecticut are making serious pushes to finalize their own programs as the states wrap up their 2016 legislative sessions in the coming weeks. In fact, approximately half the states are currently considering measures to close the retirement coverage gap.

At President Obama’s direction, last November the Labor Department unveiled a proposed rule to clarify ERISA’s application to state-run IRA programs, in the process tilting the playing field in favor of those programs in competition with the private sector.
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Old 06-08-2016, 11:52 AM
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Washington
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Quote:
First State-Run Retirement Plan for Private-Sector Set to Launch

Starting January 1, 2017, Washington will be the first state to offer a state-run retirement plan for private-sector workers.

According to the Puget Sound Business Journal, the Small Business Retirement Marketplace will be an Internet site through which individuals and employees of small companies can set up retirement plans. It will operate much like the Washington Health Exchange does now for individuals to buy health insurance.

Through the portal, workers will be able to choose among several established retirement plan providers, which will be screened by Washington State, the news report says. The system will have no contribution minimums, and such a plan will remain with the person even when they switch jobs. It will allow employees to contribute through an employers’ payment system, so that contributions will be automatically deducted from a paycheck, but if an employer doesn’t want that, the system also can regularly deduct contributions from a person’s bank account, or individuals can make contributions when they wish.

Mark Iwry, senior advisor to the U.S. Secretary of the Treasury was in Seattle to talk about the marketplace. “For the employer [that] does not sponsor a 401(k), the retirement marketplace would make it easier to select a provider and adopt a plan,” he said, according to the news report, “with the assurance that the provider has been vetted, and the fees are not excessive.”

Last November, the U.S. Department of Labor (DOL) published a notice of proposed rulemaking and an interpretive bulletin meant to guide states as they create such retirement programs. However, retirement plan industry groups contend the DOL proposal for state-run retirement programs would result in a confusing patchwork of laws and other unintended consequences. And some say such plans will not close the retirement savings gap much.

Research from the Center for State and Local Government Excellence (SLGE) suggests a national auto-IRA program would be more efficient.
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Old 07-06-2016, 06:25 PM
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http://www.cbsnews.com/news/states-a...ith-auto-iras/

Quote:
With a push from AARP, a small but growing number of states are legislating "automatic IRAs" for the employees of their smaller businesses that don't offer a pension or 401(k).

Currently, an estimated 55 million Americans -- about half the workforce -- have no employer-sponsored retirement plan to supplement Social Security, said Sarah Myseiewicz Gill, AARP senior legislative representative. But if plans like Maryland's new auto-IRA, which mandates the automatic enrollment of any employee who works 30 hours or more for a company with at least 10 employees, were adopted nationwide, as many as 37.5 million Americans could be included, she said.

Many of those people could open IRAs on their own initiative, "but we know only 5 percent will do that, and those numbers haven't moved over the last three decades," she said.

Yet as these bills wind their way through statehouses, they're also getting major pushback from financial service firms because the auto-IRAs would typically be invested by state-administered agencies that might compete with private-sector retirement plan vendors and investment managers. Employers, which would be required to deduct the contributions from their employees' paychecks and forward them to the state, are also expressing concerns about that role.

......
In New York, an auto-IRA bill was working its way through the Assembly during the closing days of the current session. However, the Business Council of New York filed a comment in opposition, noting that none of its members had "asked for the creation of this type of program with another employer mandate." (The bill didn't pass.)


Connecticut and Maryland enacted auto-IRA laws in May. Illinois was the first in 2014, followed by Oregon in 2015, and both are scheduled to start enrollments in June 2017. This year, at least 14 other states have either commissioned studies or considered bills on what are also known as "work and save" or "secure choice" retirement plans, including Vermont, Iowa, Colorado, Georgia, Louisiana and Hawaii.

......
Connecticut ended up with a hybrid. It includes an auto-IRA, but "the governor requested we do a marketplace also," said Joe Aresimowicz, the majority leader in the Connecticut House of Representatives and the plan's leading proponent. Under the plan, which will become operational on Jan. 1, 2018, employers with five or more employees will auto-enroll their workers, and the money will go into Roth IRAs.

......
Usually, auto-IRAs have a default contribution rate of 3 percent, which employees can lower or raise, and their money will be forwarded to a state agency for investment. For instance, in Illinois, the default investment will be a life-cycle fund, which will be invested according to a person's age, becoming more conservative over time as a person grows older and nears retirement. A seven-member board will add other options over time.

Since none of these plans are operational yet, no one knows how many people will opt out. Also, auto-IRAs, have no matching contribution from an employer, which is the main benefit of a 401(k). And since most are structured as Roth IRAs, which are funded with aftertax dollars, there's no tax deferral like a traditional IRA.

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