Retirement Security

About This Issue

The Illinois Legislature passed the Secure Choice Savings Program on December 3, 2014. The program addresses our state's growing retirement savings crisis by giving Illinois workers the tools to save their own money for retirement through automatic payroll deductions.

 

HOW IT WORKS:

The program applies to workers whose employer 

  • Has at least 25 employees, that are 18 years or older, year round 
  • Has been in existence for at least two years 
  • Offers no retirement plan besides Social Security 

Workers 

  • Are automatically enrolled in the program 
  • Can easily opt out of the program if they don’t want to participate 
  • Contribute 3% of every paycheck into a Roth IRA account
  • Can change the 3% and make investment choices if they would like to 
  • Can keep the same account as they move from job to job 

Employers 

  • Give employees the choice to opt out of the program 
  • Use their existing payroll software to send the worker’s contribution to the fund each pay period 

Funds are pooled and professionally managed by a private investment company 

  • A 7-member board, chaired by the Treasurer, oversees the program 
  • The board chooses a private investment company through a competitive bidding process 
  • Assets are pooled, keeping fees low and transparent. Fees cannot exceed 0.75%
  • The board is required to set up a risk management and oversight program, annually submit an audited financial report to the General Assembly, and conduct regular reviews of the contracted investment firm.

 

SECURE CHOICE DOES NOT:

Burden businesses with cost, responsibility or liability 

  • Employers do not contribute to the accounts 
  • Employers do not manage funds or investments 
  • Employers do not provide financial training or advice, or bear any fiduciary responsibility 

Burden the State 

  • The State does not contribute to the accounts 
  • The fund is self-sustaining and does not rely on state money for administrative costs 
  • A private firm, rather than the State, manages the money 

Burden the worker 

  • No one is required to participate in the program 
  • Workers do not have to make investment decisions 
  • Accounts are the private property of each worker so funds cannot be swept or otherwise taken 

 

NEXT STEPS:

IABG & other community leaders will be working with the State Treasurer to implement the program. Funds must be raised before the program can roll out.