More than 1.2 million Illinois workers who lack access to a retirement plan through their employer may finally benefit from a statewide initiative passed in 2015.
Businesses that employ 500 or more people and don’t offer retirement plans of their own are now required to participate in the Illinois Secure Choice Savings Program, which automatically enrolls employees in a state-administered retirement plan.
The state is rolling out the program in three waves through November 2019, when businesses with 25 or more workers will be required to participate.
Illinois State Treasurer Mike Frerichs sat down with Morning Shift host Tony Sarabia to talk about the program.
On America’s retirement crisis
Mike Frerichs: Everyone knows they need to save for retirement, but too many Americans are not doing it. One in five working adults have less than $5,000 saved for retirement. That’s a retirement crisis here in this country and we think that the way to help them is to make it easier. You can tell if someone is saving for retirement or not because if someone has a workplace retirement savings option, they’re 15 times more likely to be saving for their retirement. What we’re doing is giving people the opportunity to have automatic payroll deductions put aside in their own account. They have a choice of how they want to invest that money, they can increase or decrease the contribution amounts, but now, 1.2 million people will have an option at their employer that they didn’t before.
On helping low-income workers save
Tony Sarabia: What about low-income workers who live paycheck to paycheck and maybe can’t set aside something for retirement?
Frerichs: Employees are automatically enrolled, but they can opt out. If they need (their entire paycheck), they don’t have to make a contribution. What we find is that most people… if it’s automatically deducted, they don’t see it, it’s put aside, they live within what they have left out there. And we know that these people want to retire someday. They want to be able to enjoy their golden years and if we don’t find some way to help them save something, they’re not going to be able to.
This interview has been edited for brevity and clarity. Click the “play” button to hear the entire conversation.
LEARN MORE: Illinois Rolls Out New Savings Program for Workers Without Retirement Plans (WTTW 11/15/18)
How Illinois retirement program works (and is it a good idea?) (Daily Herald 7/8/18)