|Posted:||January 23, 2017 05:04 PM|
|From:||Representative Michael K. Hanna|
|To:||All House members|
|Subject:||Keystone Retirement Security Program (Former HB2396)|
The lack of retirement savings is a growing concern for too many Pennsylvanians. We plan to reintroduce 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 this type of program would result in an extra $3,000-$6,000 each 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 do not already offer a retirement plan, such as 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 personally designated 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 savings plan, Treasury can capably manage these accounts at a low cost through economies of scale.
In accordance with 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 do not offer workers a tax-qualified retirement plan. Since automatic deductions from employee paychecks already exist in other accounting systems, the administrative burden on employers is negligible.
Please join me in co-sponsoring this important piece of legislation to increase the retirement security of current and future workers. Together, we can help individuals close to their golden years or those who have decades to go before retiring, benefit from retirement security.
If you have any questions, please contact Eric Mock at 717-772-2283 or by e-mail at EMock@pahouse.net.
Introduced as HB465