Pa. needs auto-IRA plans to boost retirement savings: Treasurer Torsella https://www.inquirer.com/news/treasurer-joseph-torsella-retirement-task-...

⛓
Skip to content

Pa. needs auto-IRA plans to boost retirement savings: Treasurer Torsella

Pennsylvania may be the next state to propose automatic-savings plans for workers,
according to the treasurer, Joseph Torsella.

Large numbers of Pennsylvanians are unprepared for retirement, and insufficient savings
will affect their own lives and the state budget, Torsella said Thursday at a news
conference in Harrisburg.

The aging commonwealth has the fifth largest population over 65 in the United States.
The number of seniors in Pennsylvania – defined as people aged 65 to 74 – rose by
303,000, or 31 percent, between 2010 and 2017. That number will increase by 270,000
by 2025, for a total of 1.55 million seniors in Pennsylvania.

Auto IRAs

“The auto IRA is a common sense solution” to the savings crisis, Torsella said, and “has
deep and bipartisan roots. Six other states have it, and 20 states are contemplating this in
2019.”

“Over time, it will be financially self-sustaining. It won’t cost business owners one dime,
or expose them to liability,” he said.

Such a plan would automatically enroll anyone who doesn’t already have a retirement
plan through work. No details were available on how much would be deducted from
paychecks.

Any savings program would be administered by Treasury, similar to 529 college savings (+)

1 of 4 7/5/2019, 1:43 PM
Pa. needs auto-IRA plans to boost retirement savings: Treasurer Torsella https://www.inquirer.com/news/treasurer-joseph-torsella-retirement-task-...

accounts, or ABLE accounts for Pennsylvanians with disabilities. This new effort would
be run by private-sector vendors, the report said, and there’s no information yet on what ⛓
the fees would be.

Sponsors for auto-IRA bills would likely include Art Haywood (D., Montgomery) and Pat
Browne (R., Lehigh) in the Senate and Mike Peifer (R., Pike) and Michael Driscoll (D.,
Philadelphia) in the House, according to a Treasury spokesman, although no formal
legislation has been put forth yet.

"We hope to be back in a few months to announce passage” of auto-IRA legislation,

Torsella said. He also didn’t specify which private firms might run the auto-IRA program.

New Jersey this year proposed “portable” IRAs, or individual retirement accounts. In late
February 2019, the New Jersey General Assembly passed legislation to create the auto-
IRA retirement savings program in the state, following the model adopted by other states.
The bill is expected to be signed by Gov. Phil Murphy.

States with an automatic-IRA (auto-IRA) include California, Connecticut, Illinois,

Maryland and Oregon.

Another option is multiple-employer plans (MEPs), such as the Vermont Green Mountain
Secure Retirement Plan, enacted in 2017. The Vermont plan is voluntary and only
employers with 50 or fewer workers are eligible. Once the employer opts in, all employees
will be automatically enrolled with the ability to opt-out. The plan will be open for self-
employed workers such as contingent workers, gig workers, and independent or contract
workers.

Some good news: Pennsylvania has slightly higher retirement balances than the national
average.

The average account in Pennsylvania has close to $41,000, or about $10,000 more than
the national average. That still falls significantly below the recommended eight times
annual income for a comfortable retirement, per the U.S. Census Bureau 2013-2017
American Community Survey. The commonwealth’s average annual household income is
about $78,000.

Who Needs a Savings Plan?

The Pennsylvania Treasury Department Private Sector Retirement Task Force projects
that financially unprepared retirees will demand social services costing Pennsylvania an
additional $14 billion between the years 2015 and 2030. A copy of the report is available
online here: www.patreasury.gov/pdf/retirement/Retirement-Hearings-Report.pdf.

More than 2.1 million Pennsylvanians work for employers that do not offer retirement
plans. More than 500,000 are in companies with 50 to 499 employees; 703,000 more
work for businesses with 500 or more employees, the task force found.

“We have an aging population. In 2020, one quarter of Pennsylvanians will be 65 or

older. That’s next year,” Haywood said at the news conference. “And this isn’t just for
older adults, it’s for millennials, who are stuck deep in student debt. They need
retirement planning, too.”

Researchers at Pew Charitable Trusts found that access varies widely by industry, with
fewer retirement options offered in construction, retail, leisure, and hospitality. Part-time
workers are less likely to have access, meaning women – who work part time more than
men – are affected more. In addition, minorities have less access to workplace plans than
white workers. Fifty percent of blacks and 56 percent of Hispanics do not have workplace
retirement benefits, compared with 42 percent of white non-Hispanic workers.

(+)

2 of 4 7/5/2019, 1:43 PM
Pa. needs auto-IRA plans to boost retirement savings: Treasurer Torsella https://www.inquirer.com/news/treasurer-joseph-torsella-retirement-task-...

Nationally, almost half of Americans approaching retirement have nothing saved. The ⛓
good news is that the new estimate, from the U.S. Government Accountability Office, is
slightly better than a few years ago.

Of those 55 and older, 48 percent had nothing put away in a 401(k)-style defined
contribution plan or an individual retirement account, according to a GAO estimate for
2016. That’s down from the 52 percent without retirement money in 2013.

Among the task force members were state Sen. Scott Hutchinson; retired state Rep.
Bernie O’Neill; state Sen. John Blake, state Rep. Jake Wheatley; Kevin Shivers, National
Federation of Independent Business of Pennsylvania; Sarah Gill, AARP; Frank Snyder,
Pennsylvania AFL-CIO; and Bob Jazwinski, Pennsylvania Institute of Certified Public
Accountants.

We Recommend

Josh Boak, AP Economics Writer

Margot Roosevelt, Los Angeles Times

Newsletters

Get the news you need to start your day

Never Miss a Story

Subscribe

News & Info

Marketplace
Mobile Apps

About Us

(+)

3 of 4 7/5/2019, 1:43 PM
Pa. needs auto-IRA plans to boost retirement savings: Treasurer Torsella https://www.inquirer.com/news/treasurer-joseph-torsella-retirement-task-...

© Copyright 2019, The Philadelphia Inquirer, LLC Terms of Use/Privacy Policy

(+)

4 of 4 7/5/2019, 1:43 PM