A proposal that Public Advocate Letitia James floated in a special report last June to create city managed retirement savings program for private sector employees is getting the support of Mayor Bill de Blasio and City Council Speaker Melissa Mark-Viverito.
Most private sector workers in New York City do not have any access to a retirement savings program, and low-income, immigrant, minority, and female New Yorkers are disproportionately impacted:
- Only 43 percent of working New Yorkers have access to a plan that can help them save for retirement. Those that do have access often face large fees, because they do not have the leverage provided by a collectively-pooled savings program.
- Even those who have started to save do not have much: 40 percent of New Yorkers between the ages of 50 and 64 have less than $10,000 saved for retirement.
- To simply live at poverty level for a 15-year retirement, a New Yorker would need roughly $215,000 in savings.
“Fewer than half of all working New Yorkers have access to a retirement savings plan – and many who have started to save don’t have much. We won’t accept a status quo where people work all their lives only to be left with nothing,” said de Blasio, who announced the plan during his State of The City address. “That’s why we’re working to become the first city in the country to create a retirement savings program for private sector employees.”
De Blasio, Mark-Viverito and James will draft legislation that would enable any New Yorker working at a business with ten or more employees to automatically enroll in an employee-funded retirement plan.
- The plan would create an automatic-enrollment individual retirement account for employees at businesses of 10 employees or more that do not already have a program. Businesses that have a program could not drop their current plan to enroll in this one.
- Contributions would be exclusively from employees (rather than from employers or the City) and made through payroll. Contributions would be based on a default rate; employees would have the ability to change their rate or opt out of the program.
- Employees would be able to transfer the savings account from job-to-job.
- The City would create a board to establish and oversee the management of the program, which will be phased in over the next few years. The City will also undertake a robust outreach and education effort on the program.
The City has also submitted comments to the U.S. Department of Labor in support of a federal rule change that would ensure cities could create retirement savings programs without liability or burdensome requirements.
“Millions of hard working New Yorkers are facing a life of poverty and destitution when they retire,” said James. “It is imperative that we create the infrastructure for New Yorkers to save for retirement and prepare for the future. I am proud to partner with Mayor de Blasio and Speaker Mark-Viverito in making retirement security for all New Yorkers a priority for our City. Every New Yorker deserves to live their golden years in dignity and our legislative action will help make this goal a reality.”
Sheepshead Bay Assemblyman Steven Cymbrowitz, Chair of the Assembly Aging Committee, said with the population of older adults increasing every year, helping members of the workforce prepare for the future is an issue of increasing concern.
“I commend Mayor de Blasio for coming up with a solid initiative that will allow thousands of private employees to plan for a financially secure retirement, something that would not have been possible for many of them otherwise,” said Cymbrowitz.