{"id":166,"date":"2014-12-08T08:43:00","date_gmt":"2014-12-08T14:43:00","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/2014\/12\/the-illinois-secure-choice-savings-program.html"},"modified":"2016-08-16T09:50:45","modified_gmt":"2016-08-16T15:50:45","slug":"the-illinois-secure-choice-savings-program","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2014\/12\/the-illinois-secure-choice-savings-program.html","title":{"rendered":"The Illinois Secure Choice Savings Program"},"content":{"rendered":"\n<\/head>

which was passed by the legislature last week, looks, on balance, to be a good program.<\/p>\n

<\/div>\n
As the Chicago Tribune<\/a> reports,\u00a0<\/div>\n

Under the measure, sponsored by Sen. Daniel Biss, D-Evanston, and House Majority Leader Barbara Flynn Currie, D-Chicago, small companies with at least 25 employees will have to offer IRA access at the workplace if they don\u2019t offer a 401(k)-type plan. In a critical move to end the procrastination that keeps people from saving, employers will be required to automatically take 3 percent of each employee\u2019s pay out of paychecks upfront. And that 3 percent will go into an IRA for each person.<\/p><\/blockquote>\n

Although employees will be able to opt-out, research shows that automatic enrollment is a very effective means of increasing retirement savings. \u00a0Also, the funds will be automatically directed into a \u201ctarget date\u201d or \u201clifecycle\u201d fund, in which asset allocation is determined by one\u2019s age and progressively moves from more aggressive to more conservative investments.<\/p>\n

Crain\u2019s<\/a> gives more detail on the nature of the IRA. \u00a0It\u2019s not a matter of each employer choosing an IRA; instead,<\/p>\n

Operating much like the state\u2019s Bright Start college savings program, a panel including the state treasurer, budget chief and several outside directors named by the governor will hire a private firm that will run the program and offer various investment options. The program, called Secure Choice, will be portable, carrying over to a new employer if a worker changes jobs. Employees can contribute more or less than 3 percent of their salary if they choose.<\/p><\/blockquote>\n

Is this the right approach? \u00a0On the one hand, the Bright Start program has had issues in Illinois, and, given Illinois\u2019 history of corruption, one worries that there is the potential for corruption here, too \u2014 be it selection of directors for political reasons rather than governance and investment expertise, heavy-handed pressure by the state government for the managing firm to invest in politically-favored investments (at the extreme, buying state bonds at below-market interest rates), or kickback demands \u2014 which, if this program is successful, could mean large sums of money to be misused. \u00a0On the other hand, any employer who wishes to avoid this program can just provide an alternate retirement plan. \u00a0(Though the question I now have, and don\u2019t have time to answer this morning, is: \u00a0how easy or difficult is it for small employers to offer a retirement savings program? \u00a0Are there too many regulatory burdens in their way?) \u00a0And, in any case, if nothing else is on offer, this program is a lot better than nothing.<\/p>\n

One wishes, though, that Illinois would leave the pioneering to other states (they\u2019re the first ones to enact something like this) as long as the state still has the task in front of itself of just simply getting its fiscal house in order.<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

which was passed by the legislature last week, looks, on balance, to be a good program. As the Chicago Tribune reports,\u00a0 Under the measure, sponsored by Sen. Daniel Biss, D-Evanston, and House Majority Leader Barbara Flynn Currie, D-Chicago, small companies with at least 25 employees will have to offer IRA access at the workplace if […]<\/p>\n","protected":false},"author":2209,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[450],"tags":[125,126],"class_list":["post-166","post","type-post","status-publish","format-standard","hentry","category-actuarial","tag-illinois-secure-choice","tag-retirement-savings"],"yoast_head":"\nThe Illinois Secure Choice Savings Program<\/title>\n<meta name=\"description\" content=\"which was passed by the legislature last week, looks, on balance, to be a good program.As the Chicago Tribune reports, Under the measure, sponsored\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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