Pennsylvania is the latest state working on an initiative to introduce an automatic individual retirement account for private-sector workers whose employers don’t offer retirement savings options, according to news reports.
Under the plan, whose outlines were put in place following a task force formed by Treasurer Joe Torsella, the state’s Treasury Department would administer a retirement savings program that would put payroll deductions into the retirement accounts of workers whose employers don’t offer a 401(k)-style account or a traditional pension plan, the Associated Press writes. The plans would be portable, and the Treasury would select an investment manager in the private sector to come up with various investment plan options, according to the news service. Employers, meanwhile, wouldn’t be expected to contribute anything under the proposal, which is currently being drafted as legislation by the state’s House Finance Committee Chairman Mike Peifer, R-Wayne, the AP writes.
So far, the plan has bipartisan support, according to the news service. Details of the plan, such as whether employees would be able to opt out or employers required to participate, remain to be ironed out, the AP writes.
Around 2.1 million Pennsylvanians — a third of the state’s workforce — have no access to employer retirement savings accounts or pension plans, according to the news service. At the same time, the state’s retirement-age population is expected to rise sharply in the near future while the size of its working-age population declines, the AP writes.
“We’re one of the states in the union where we’re really getting older, the shift is really pronounced and we need this more than most,” Torsella, a Democrat, says, according to the news service. “This is something that would help those people, it would help small businesses and it would help the commonwealth’s books.”
Pennsylvania follows six other states that have started offering similar plans, the AP writes. Oregon, the first to roll out such a program in 2017, already has over 76,500 employees in its plan and over $17 million in assets, the AP writes.