Once upon a time, we’d stay in one job for decades, and retirement savings weren’t a worry. That time has passed. Now, we’re struggling, often hopping from job to job, and, in many cases, not getting a pension or 401(k). Whenever we think about retirement, too often it’s a seemingly unattainable dream. More than half of the state’s private sector workers don’t have access to an employer-sponsored retirement plan, according to AARP.
A broader strategy to help workers put away money toward retirement must be considered.
Mayor Bill de Blasio has proposed a city-organized retirement plan for private sector employees. Gov. Andrew Cuomo has appointed SUNY Chairman and former state Comptroller H. Carl McCall to head a commission to study a similar program for the state. Under de Blasio’s plan, anyone who works in a city business with 10 employees or more could qualify. Employees of companies that don’t have retirement savings programs would be automatically enrolled in individual retirement accounts, and they’d have the ability to opt out or change their contributions. An independent board would oversee and manage it.
It’s a relatively simple but critically important idea, but there’s one snag. A federal law governing pensions, known as the Employee Retirement Income Security Act, or ERISA, places liability and other requirements on plan organizers. That could be a deal-breaker. Last year, the U.S. Department of Labor proposed a rule change to exempt state-run plans. It’s winding its way through approval.
Federal officials should finalize the change and extend it to large cities. State and city officials must determine whether there should be one statewide program, or a separate one for NYC. Any program must be comprehensive, transparent and well-managed, with a diversity of options. Automatic enrollment is necessary to be wide-reaching, but everyone must be made aware of the ability to opt out. Every eligible worker must get the proper paperwork and ample education to understand the risks and the rewards.
If done well, this could transform the financial future of individuals across NYC, and the state.
