A proposal to establish a state-based retirement savings program with automatic enrollment has cleared the lower chamber of the Pennsylvania State Legislature and is now under consideration by the finance committee of the state Senate.
The vote on House Bill 577, which is co-sponsored by several dozen Democratic members, was 106-95, and its supporters are urging speedy consideration and passage of the bill by the Republican-led Senate.
The legislation would establish a new program called "Keystone Saves," following in the footsteps of the significant and growing number of states that have moved to establish government-administered retirement savings accounts for private-sector workers.
As described by the bill's co-sponsors, the Keystone Saves program would allow the more than 2 million Pennsylvania workers who currently have no opportunity to save for retirement at their place of employment to establish payroll-deduction-funded individual retirement accounts. As drafted, the bill would utilize automatic enrollment, but participation would not be mandatory among employees.
As the bill's sponsoring members highlight, a report in 2019 from a state Treasury Department task force on private-sector retirement security found that a vast number of Pennsylvanians are unprepared for the financial challenges of retirement.
It's a problem not just for retirees but also for the commonwealth, the members say, 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.
