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Senate Co-Sponsorship Memoranda
Senate of Pennsylvania
Session of 2015 - 2016
Regular Session
MEMORANDUM
| Posted: | September 1, 2016 01:40 PM |
|---|---|
| From: | Senator Art Haywood and Sen. John H. Eichelberger, Jr. |
| To: | All Senate members |
| Subject: | Private Employee Retirement Savings |
| Too many Pennsylvanians struggle to save for retirement and don’t have access to financial services that can grow retirement savings. Experts estimate that workers should have at least two or three times their annual salary saved by their 40’s to be on track for a healthy retirement. In 2012, the Employee Benefit Research Institute projected that almost half of current workers are at risk of having insufficient income to meet basic expenses in retirement. Unfortunately, fewer workers have retirement plans through their employer, and many financial products and services have fees and terms that make them inaccessible to the average individual. In the near future, we plan to introduce a bill to create a retirement savings plan for private employees in the Commonwealth. Our legislation would offer a deferred compensation style plan to Pennsylvanians who are employed outside of the public sector. To create the scale necessary to make the plan financially viable, all employees who do not have an employer retirement plan would be automatically enrolled in the statewide deferred compensation plan. Those who choose not to participate can opt out of the program simply by notifying their employer of their decision. Under our plan, employers could, but are not required to, contribute to an employee's account. Our plan will not compete with existing private, employer pension plans as it would only apply to workers whose employers do not offer pension plans. Contributions will be pre-tax, with no maximum contribution, and a minimum contribution of just $25/month. Individuals will be given a menu of investment options based on potential risk, similar to the deferred compensation plan currently offered to state employees. As the fourth-oldest state in the nation with a growing senior population, it is critical that we empower Pennsylvanians now to create retirement savings before they leave the workforce. Please join us in co-sponsoring this legislation. |