The Land of Lincoln is about to become the first state in the nation to mandate retirement savings programs in the private sector.

The Illinois Senate this week approved amendments to the Secure Choice Savings Program Act, which had passed the House earlier by a 67-45 margin. The bill will now be sent to outgoing Gov. Pat Quinn.

If signed into law, as is expected, the act would require businesses with 25 or more employees that don’t already provide a retirement plan to auto-enroll workers into an IRA, via a payroll deduction, with the intent of “promoting greater retirement savings for private-sector employees in a convenient, low-cost and portable manner.”

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Employers not willing to participate will be subject to an annual $250 fine per employee.

Enrollees would be given the option of opting out after being enrolled.

The law also creates an oversight board. Fiduciary obligations will fall on the Secure Choice Savings Program Fund’s board of trustees, not on individual employers. The board will oversee the assets collected, and be in charge of naming investment providers.

One of the amendments in the Senate caps the annual expenses on the funds collected at 0.75 percent, less than the 1 percent originally proposed.

The Senate also amended the employer size threshold to 25 employees, after it was originally set at 10.

The Illinois Treasurer’s office projects that between $15 million and $20 million will be needed to create a board of trustees and staff, to pay advisor consultants, lawyers and actuaries, and for office space and other operating costs to oversee the program.

Not included in those costs are potential fees charges by the Illinois Department of Revenue for enforcement costs not covered by penalties from non-compliant employers.

Barbara Currie, the bill’s chief sponsor in the House, said employers are already required to withhold income taxes and child support from paychecks, and that the savings requirement is “very little different,” according to reporting in the Illinois News Network.

Enrollment will begin two years from the law’s expected enactment.

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Instant Insights /

Illinois poised to adopt mandatory retirement savings law

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