Illinois to start program to boost retirement savings
CHAMPAIGN, Ill. (AP) — Illinois will soon begin a program requiring many employers to help create voluntary retirement-savings plans for employees and offer automatic payroll deductions.
Secure Choice could eventually cover 1.2 million Illinois residents, State Treasurer Mike Frerichs told the News-Gazette .
"This dramatically increases the number of people who are saving their own money for their retirement," said Frerichs, chairman of the seven-member board overseeing the program. "This is not a state defined-benefit program. This is not Social Security. This is giving people the tools they need to invest in themselves so that they have a brighter retirement."
Businesses that have been operating for two years and have at least 25 employees must either create their own retirement plan or participate in Secure Choice, Frerichs said at a retirement-planning seminar Wednesday. Employers won't be required to contribute to the program or pay a fee to participate.
Employees will automatically have 5 percent of their income put into a savings account, but they can change that percentage, Frerichs said. Employees may also opt out of the program.
"The vast majority of people, when they're enrolled, stay enrolled," Frerichs said. "Everyone knows they need to save for their retirement. We just put it off because it's too difficult, it's complicated, it's confusing or I can't put the money aside today."
The state will roll out the program in several phases to work out problems and bugs, Frerichs said. The program will begin next month with employers who volunteered to participate. The state's largest employers will be required to start the program in October, and medium- and small-sized firms will start next year.
The U.S. has a "pending retirement crisis," said Ron Pressman, CEO of financial services firm TIAA.
Pressman said that about a third of Americans don't have anything saved for retirement, and a third of middle-class Americans fear they'll "have to work until they die to sustain themselves."