The Illinois Senate last week approved a bill that would create a retirement savings program for private-sector workers that don’t have access to an employer-sponsored retirement plan.
The Illinois Secure Choice Savings Program Fund would allow workers to set aside money for retirement through a payroll deduction IRA that would be low-cost, convenient and portable when people change jobs.
The Illinois Secure Choice Savings Program Fund would consist of money received from enrollees and participating employers. The Act sets forth the composition of the Board, the Board’s duties and provisions governing risk management, investment firms and investment options.
More than 2.5 million Illinois workers do not have access to retirement savings plans through their jobs.
The Secure Choice plan would give them access to savings accounts that would be similar to traditional IRAs. The option would be available to all employers with 25 or more workers that have been in business for at least two years and don’t already offer a 401(k) or other retirement vehicle.
It would automatically enroll individuals into the plan at a 3 percent deferral rate.
Other businesses could participate on a voluntary basis.
The state of Illinois would not put any money toward the plan. It would be funded entirely by participant contributions. The Senate did amend the bill to make sure that administrative costs stayed below 0.75 percent.
The bill went to the House on April 10 and was referred to the Rules Committee. Once it gets through committee it will go to a House vote.