At a time when the future of progressive policymaking is depends on pragmatic leadership at the state and local level, the NewDEAL is pleased to present the Monthly Spotlight, an in-depth look into one of the many innovative ideas being championed by NewDEAL Leaders. To see all ideas that have been submitted through our bi-annual Ideas Challenges, visit the NewDEAL Ideas Portal, and visit our new Ideas Challenge Hub for more resources.
The Choice of a Secure Future
Employer-based savings plans have long served as a crucial cornerstone for Americans’ long-term retirement income. Unfortunately, there is a growing gap between small businesses and larger employers in their ability to provide these employer-based savings plans. This week, after Congress passed legislation that would make it even more difficult for small employers to provide savings plans for their employees, we’re pleased to feature a plan from two NewDEAL Leaders in Illinois that is helping Americans plan for a secure retirement.
Secure Choice Retirement
Senator, Evanston, IL
What is Secure Choice?
Secure Choice is Illinois’ state-based retirement savings program that would help workers save for a more secure future by requiring small businesses to either provide employer-based savings plans, or automatically enroll their employees in the state program. The first of its kind in the United States, this program is the result of a partnership between two NewDEAL Leaders, State Senator Daniel Biss and Illinois State Treasurer Mike Frerichs.
The bill behind Secure Choice was introduced to the Illinois State Legislature by Senator Biss in 2014 and was signed into law the following year. Since that time, Treasurer Frerichs has worked to make the innovative program a reality, serving as the chair of an independent, bipartisan board in charge of the program. While the program is still in its early stages, it is estimated that an additional 1.2 million Illinois workers would gain access to a workplace option through Secure Choice.
How is it working?
What makes Secure Choice unique is its automatic enrollment standard. Any worker in a company of 25 employees or more without an employer-based plan will be automatically enrolled in Secure Choice and will have 3% of their pay automatically transferred into a target date Roth IRA. While employees can voluntarily opt out of the program, the automatic enrollment feature significantly increases the likelihood of a worker's long-term participation.
Additionally, data suggests that workers enrolled in automatic enrollment savings plans are far more likely to stay enrolled in such programs long-term. Secure Choice encourages long-term investment by ensuring that each savings account in the program is individually owned by the respective worker and is portable from job to job.
Defending State Retirement Programs
When Congress passed legislation to resist programs like Secure Choice, NewDEAL Leaders Treasurer Frerichs, Rhode Island Treasurer Seth Magaziner, and Oregon Treasurer Tobias Read signed onto a letter in support of state-based retirement savings programs, along with 16 other state treasurers and budget officials.
If you are interested in learning more about retirement programs like Secure Choice, please contact Julian Federle in the Illinois Treasurer's Office at email@example.com or (312) 814-1793.
The Aspen Institute's Financial Security Program does research and public events around retirement issues, and has featured NewDEAL Leaders like Oregon Treasurer Tobias Read for their work to improve workers' access to retirement.