|Posted:||September 6, 2016 02:30 PM|
|From:||Representative Michael K. Hanna|
|To:||All House members|
|Subject:||Keystone Retirement Security Program|
The lack of retirement savings is one of the most common pitfalls for too many Americans. I plan to introduce legislation designed to provide a simple way for Pennsylvanians who do not have access to an employer-supported retirement plan to put money aside for retirement through automatic payroll deductions. Studies and experience in other states clearly show the effectiveness of such programs in prompting more people to save for their own retirements. One recent study calculated that the retirement savings under the program would result in an extra $3,000-$6,000 each year, every year for lower and middle-income employees at retirement.
The proposed Keystone Retirement Security Program of individual, low-cost, fully portable, Roth IRA accounts (with no additional administrative burdens on employers or employees), would be managed by the state Treasury and give working Pennsylvanians more financial security in the years ahead.
Employers (with five or more employees) that don’t already offer a retirement plan, like a standard pension or a 401(k), would be required to offer their employees enrollment in the Keystone Retirement Security Program. Workers could decline the structured savings plan if they choose, otherwise a small portion of their pay will be automatically deposited into an account that Treasury will manage for the employee. As we’ve seen in the 529 college saving plan, Treasury can capably manage these accounts at low cost through economies of scale.
Note there will be no additional cost to employers. Taking advantage of recently issued federal guidance intended to facilitate implementation of these programs in a growing number of states, no employer contributions will be permitted to an employee’s account. The Keystone Retirement Security Program would be a default option for employers that don’t offer workers a different tax-qualified retirement plan. Because the accounting systems for other required automatic deductions from employee paychecks already exist, the administrative burden on employers is negligible.
Please join me in co-sponsoring this important legislation to increase the retirement security of current and future workers, who will benefit whether they are close to their golden years or have decades to go before retirement.
If you have any questions, please contact Eric Mock at 717-772-2283 or by e-mail at EMock@pahouse.net
Introduced as HB2396