ALBANY, N.Y. — AARP New York is applauding a new state law that will help as many as 2.5 million private-sector workers save for retirement through an automatic enrollment payroll-deduction savings program. The new law “strengthens” the state’s enacted but yet-to-be-implemented Secure Choice Savings program. It requires private companies and nonprofit organizations with at least […]
ALBANY, N.Y. — AARP New York is applauding a new state law that will help as many as 2.5 million private-sector workers save for retirement through an automatic enrollment payroll-deduction savings program.
The new law “strengthens” the state’s enacted but yet-to-be-implemented Secure Choice Savings program. It requires private companies and nonprofit organizations with at least 10 employees — that don’t already offer a retirement-savings option — to enroll their workers in a portable Secure Choice individual-retirement account (IRA) unless the employee opts out.
The requirement promotes retirement saving in a “convenient, low cost, and portable” manner, New York Gov. Kathy Hochul’s office contended in an Oct. 21 news release.
Hochul signed the bill Oct. 21 and AARP New York reacted the same day.
Established in 2015 by the New York State Secure Choice Savings Program Act, the Secure Choice Savings plan is a “self-sufficient,” retirement-savings program in the form of an automatic enrollment payroll deduction IRA. The program is overseen by the New York State Secure Choice Savings Board, composed of nine appointed members.
The New York State Department of Taxation and Finance will oversee the development and implementation of the program “as the board sees fit,” per Hochul’s office.
Over half New York’s 18- to 64-year-old private-sector workforce lacks access to employer-offered savings options as fewer companies offer pensions or 401(k)s than in previous decades, according to AARP New York.
The stronger Secure Choice program will “particularly benefit” employees of color — two-thirds of Hispanics, about 60 percent of Asian Americans, and 52 percent of African Americans — working in private-sector jobs who don’t have access to a workplace savings option.
The law will also offer businesses a “virtually cost-free” way to provide their employees with a workplace retirement-savings benefit. A recent AARP New York survey found that about four out of five small businesses in New York (79 percent) agreed that the legislation (S5395A/A.3213A) should be signed into law.
“Governor Hochul is empowering millions of working New Yorkers to save for a financially secure and independent retirement – while providing small businesses an effective way to attract and retain employees,” Beth Finkel, director of AARP New York, contended.
New York’s new law is modeled on other state programs in California, Illinois, and Oregon.
With automatic enrollment, 90 percent of eligible employees participate in workplace retirement-savings programs, AARP New York said, citing an April 2017 report from the AARP Public Policy Institute titled, “Higher Initial Contribution Levels in Automatic
Enrollment Plans May Result in Greater Retirement Savings: A Review of the Evidence.”
Without it, participation rates drop to 70 percent — including mostly older employees and higher paid workers. Younger employees, women, people of color, and lower-paid workers are less likely to participate, the April 17 report noted.