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House of Representatives
Session of 2021 - 2022 Regular Session


Posted: December 2, 2021 03:22 PM
From: Representative Tracy Pennycuick and Rep. Michael J. Driscoll
To: All House members
Subject: Keystone Saves

Soon, we plan to introduce legislation to establish Keystone Saves, a voluntary employee retirement savings program that expands access to private sector individual retirement accounts to the over 2 million Pennsylvania workers who currently have no opportunity to save for retirement at their place of employment.
The State Treasurer’s Retirement Security Task Force Report highlighted the vast number of Pennsylvanians who are seriously unprepared for the financial challenges of retirement.  Instead of enjoying their senior years, too many of our retirees find themselves straining to match insufficient savings with the costs of living and unforeseen expenses.  It’s a problem not just for retirees but for the Commonwealth as financially unprepared retirees are projected to cost the state an additional $14 billion in social services between 2015 and 2030 (an average of nearly $1 billion per year).  In addition, lower consumer spending by retirees over this same time is estimated to cost the state roughly $1.4 billion in reduced tax collections, putting additional pressures on the Commonwealth’s finances.
An important step to address these alarming trends, we believe, is to give workers who lack access to employer sponsored retirement plans the ability to save by enabling them to have a percentage of their pay automatically deposited into an individual retirement account.  National data shows that workers who have access to an employer sponsored retirement plan are 15 times more likely to save than employees who lack access to a plan through their employer.  In Pennsylvania, 78 percent of employees with access to a retirement plan at their workplace take advantage of the opportunity to save.   Keystone Saves allows employees to contribute to an IRA through an automatic payroll deduction, giving those without an employer retirement plan the opportunity to save for their retirement like the nearly 3.1 million employees with access to an employer plan can do. 
Keystone Saves is designed to maximize employee choice and control while minimizing any burden on employers. In our proposal, employees can set their own contribution levels, increase or decrease their deductions, make investment choices, leave the program at any time, or even opt out altogether.  Employees can also default to account and investment options selected by the program that are tailored to the employee’s individual retirement needs.  Retirement accounts can provide employees with emergency savings.  Accounts are also portable so employees can continue to save if they change jobs, wish to rollover their Keystone Saves account into another retirement plan, or even move their account to a private account manager.  It is the employee’s choice.
For employers, Keystone Saves will provide a frictionless system that enables participation at no financial cost and little additional time, and extends protection from any legal liabilities.  Employers will be required to provide the program an employee census, and remit the ongoing payroll deductions of employees.  The vast bulk of employee, account, and investment administration and management activities, however, will be borne by PA Treasury working with a private sector third-party administrator and investment managers just as is done in our highly acclaimed 529 College and Career Savings Program. Employers using an automated payroll system or service and large employers will join the program first, with smaller, less automated employers enrolled in the program later.
By acting now, Pennsylvania can avoid having our businesses subject a to a clunky heavy-handed approach the federal government is actively pursuing to the same issue. The federal approach is one-size-fits-all, includes complicated, onerous provisions that would disproportionately and negatively impact small businesses, and  would  be imposed on every employer with 5 or more employees in just one year. In contrast, Keystone Saves includes a four-year phase-in period, a common-sense approach which allows businesses to plan ahead. The federal bill also includes a harsh tax penalty for non-compliance, whereas Keystone Saves takes a much more collaborative approach – we work with employers instead of treating them like the bad guys.
Treasurer Stacy Garrity, a strong supporter of Keystone Saves, shares our commitment to building the most business-friendly program in the nation that creates the greatest number of new retirement accounts for as many employees as possible. 

We respectfully ask for your consideration to join us in our bipartisan effort.

Introduced as HB2156