State Treasurer And Lawmakers Push Plan To Require Most Employers To Offer A Retirement Savings Plan
PITTSBURGH (KDKA) -- It's getting more expensive than ever to retire – and that's because many people simply do not save enough money to supplement their social security.
As money editor Jon Delano reports, state Treasurer Stacy Garrity endorsed a plan to make it easier for every worker to save for retirement.
Over two million Pennsylvanians -- 40 percent of the private sector workforce -- do not work for a company that offers a 401-k or an IRA to help workers save for retirement. That's why Garrity is backing a bipartisan bill called Keystone Saves.
"Keystone Saves is a simple, effective, business-friendly way to help those hard-working Pennsylvanians to save more for their future," Garrity told a press conference in Harrisburg on Monday.
Under this bill, sponsored by PA Rep. Tracy Pennycuick, a Montgomery County Republican, and PA Rep. Michael Driscoll, a Philadelphia Democrat, every employer in the state with five or more employees would be required to offer a retirement savings plan – although employers would not be required to contribute into it.
"Employees can set their own contribution levels, increase or decrease their contributions, make investment choices, leave the program at any time, or opt-out altogether," Pennycuick said.
Studies suggest that workers are 15 times more likely to save when offered an automatic payroll deduction plan by their employer. The program would be administered by the Pennsylvania Treasury Department with little burden on business.
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One small businessman welcomed the program.
"It helps level the playing field with larger businesses. Small family-run businesses can't offer these benefits to their employees. Getting some help from the state to allow us to offer that gives us a chance offer a product to our employees that they never had before. It also helps us recruit and retain more employees," said John Good, a small business owner and farmer from Lehigh County.
The AARP, which also supports the program, said it's hard for many to retire because social security is so inadequate. You really need personal savings.
"Older families in Pennsylvania spent $23,000 a year alone on food, utilities and health care," said Joann Grossi, president of AARP Pennsylvania. "Social security was never intended to be a person's sole source of income in retirement. At this rate, one out of every two middle class retirees will be unable to afford their basic needs in retirement."
The treasurer said if the Legislature fails to act, retirees unable to support themselves in retirement will cost all taxpayers in the end.
"If we don't do something to help Pennsylvanians save for retirement, those unprepared retirees will cost taxpayers more than $14 billion in increased state social services and, at the same time, we're going to lose out on $1.5 billion in tax collections due to reduced consumer spending," Garrity said.
The bill's sponsors hope the measure will pass the Legislature in 2022. Garrity said the program would be phased in over the next two to four years, starting with the largest employers who do not offer retirement benefits.
