Legislation to create a retirement plan for private sector employees in Illinois has been signed into law.
The Illinois Secure Choice Savings Program establishes the option of an individual retirement plan for more than two million private sector employees in the state who currently do not have access to any retirement plan at work.
“For many people across Illinois, retirement planning is often a matter of too little, too late,” says Governor Pat Quinn. “Without an adequate retirement savings plan, many people are forced to spend their later years scraping to get by with just Social Security.
The program creates a simple individual retirement savings option through a 3% payroll deduction for private sector employees whose employer does not offer a retirement plan besides Social Security.
Employers that have been in business for at least two years and employ 25 or more employees are required participate. Employees can opt out of the program or contribute more or less than the default 3%.
The funds will be overseen by a seven-member Illinois Secure Choice Savings Board, which will select a private firm to manage the money. The state will not have access to the funds as the investments are pooled as private property of the workers outside of the state treasury.
The program will provide workers an opportunity to secure a safe retirement and give more businesses the opportunity to offer a retirement savings program at no cost to the company. The program will be self-sustaining at no additional cost to the state with the exception of startup administrative costs.
The new law is effective June 1, 2015, and implementation must be complete within two years.
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