Another state-run IRA program for private sector workers is in the making.
Pennsylvania’s Keystone Saves program will be phased in over four years; the first two years are set aside for Treasury to set up the program, including an RFP process, and to implement a voluntary pilot.
Employers with fewer than five employees, and those who have been in business for less than 15 months, are excluded from Keystone Saves, as are employers with already established retirement savings plans. As has been the case with other state-run programs—10 other states already have similar programs in place—employees will be able to opt out of the program at any time.
According to a press release, more than two million working Pennsylvanians currently do not have access to retirement savings at their workplace.
Fiscal Education?
It’s also noted that the program will address a looming fiscal crisis—specifically that, unless Pennsylvania households save more, taxpayers in the state will need to fund an estimated $14.3 billion over the next 15 years for social assistance to older households that have inadequate retirement savings.
According to the press release, employers need only provide a census of employees and process a payroll deduction for each employee who participates, with all other administrative and back-end functions handled by Treasury and a private-sector third-party vendor.
In unveiling the program, the sponsors said that, “Keystone Saves protects employers from liability concerns and removes high start-up costs and complicated investment decisions that keep many employers from providing retirement benefits.”
House Bill 2156, prime-sponsored by state Rep. Tracy Pennycuick, will be introduced in the coming weeks. It will, of course, have to be passed by the Pennsylvania legislation and signed into law by the governor.
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