AARP says state law strengthens workers’ retirement security

ALBANY – AARP New York applauds new state law that will help up to 2.5 million private sector workers save for retirement through an automatic retirement savings program.

The new law “strengthens” the state’s Secure Choice Savings program, which was enacted but has yet to be implemented. It requires private companies and nonprofits with 10 or more employees – who don’t already offer a retirement savings option – to enroll their workers in a Secure Choice Individual Retirement Account (IRA), unless that the employee does not withdraw.

The requirement promotes retirement savings in a “convenient, inexpensive and portable” way, said New York Gov. Kathy Hochul’s office in an Oct. 21 press release.

Hochul signed the bill on October 21, and AARP New York responded on the same day.

Established in 2015 by the Secure Choice Savings Program Act of New York State, the Secure Choice Savings Plan is a “self-sufficient” retirement savings program in the form of an IRA of withholding. automatic enrollment salary. The program is overseen by the New York State Secure Choice Savings Board, made up of nine appointed members.

The New York State Department of Taxation and Finance will oversee the development and implementation of the program “as the board sees fit,” according to the Hochul office.

More than half of the private sector workforce aged 18 to 64, according to AARP New York, do not have access to savings options offered by employers as fewer companies offer pensions or 401 (k) than in previous decades.

The Stronger Secure Choice program will “particularly” benefit employees of color – two-thirds of Hispanics, about 60% of Asian Americans, and 52% of African Americans – working in private sector jobs who do not have access to savings in the workplace. option.

The law will also provide businesses with a “virtually free” way to provide their employees with a workplace retirement savings benefit. A recent AARP survey in New York found that about four in five small businesses in New York City (79%) agreed that the legislation (S5395A / A.3213A) should be enacted.

“Governor Hochul is enabling millions of working New Yorkers to save for a financially secure and independent retirement, while providing small businesses with an effective way to attract and retain employees,” said Beth Finkel, director of AARP New York.

New York’s new law is modeled on other state programs in California, Illinois, and Oregon.

With automatic enrollment, 90 percent of eligible employees participate in workplace retirement savings programs, AARP New York said, citing an April 2017 report from the AARP Public Policy Institute titled “Higher initial contribution levels in

Membership plans can lead to greater retirement savings: a review of the evidence. “

Without it, participation rates drop to 70 percent, including for most older employees and higher paid workers. Younger employees, women, people of color and lower-paid workers are less likely to participate, the April 17 report notes.

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