Washington—The Pew Charitable Trusts expressed support today for legislation newly unveiled in the Pennsylvania state House, saying the measure would help approximately 2 million Pennsylvanians secure a stronger financial future.
The Keystone Saves bill, authored by Representatives Tracy Pennycuick (R-Montgomery) and Mike Driscoll (D-Philadelphia), would create a public-private partnership for private sector employees in Pennsylvania who are not offered retirement benefits at their workplaces. The program would automatically enroll workers in an individual retirement account (IRA) in which a portion of their pay would be set aside every pay period. These auto-IRAs, as they are known, would be professionally managed by a third-party financial firm overseen by the state, with administration and investment fees kept low through the economies of scale that come from the establishment of a statewide program.
Employees would be able to opt out at any time or change the amount they save. The only tasks for employers would be to register workers for the program and facilitate payroll contributions. Ten states—California, Colorado, Connecticut, Illinois, Maine, Maryland, New Jersey, New York, Oregon, and Virginia—have adopted similar auto-IRA programs.
John Scott, director of The Pew Charitable Trusts’ retirement savings project, issued the following statement:
“The Keystone Saves program’s benefits are multifaceted. The program will create an easy mechanism to help workers secure their financial future while enabling businesses to provide a no-cost benefit to help their employees save. It will also address a looming fiscal crisis: Unless Pennsylvania households save more, taxpayers in the state will need to fund an estimated $14.3 billion over the next 15 years for social assistance to older households that have inadequate retirement savings. A household that begins saving as little as $25 a week in Keystone Saves can help to erase this fiscal impact on the state.
“Pew has been providing technical expertise to the Pennsylvania Treasury Department and commends Treasurer Stacy Garrity’s leadership on the issue. We also applaud Representatives Pennycuick and Driscoll for introducing this legislation and urge the House to approve the measure quickly.”