May 25—Bette Davis once declared that “old age ain’t no place for sissies,” and few older people would argue otherwise.
The observation also is true regarding finances for retirement, yet millions of Pennsylvanians hurtle toward old age without retirement savings.
One of the reasons for that is the lack of employer-provided retirement plans where they work.
That is especially true of small businesses that lack the resources to contribute to retirement plans or the administrative capacity to provide them.
According to Democratic state Rep. Kyle Mullins of Lackawanna County, about 2 million employees don’t have access to company-administered retirement accounts.
He and Democratic Rep. Pat Gallagher of Philadelphia have introduced a bill to create Keystone Saves, a state-run individual retirement account program.
The House Commerce Committee recently approved the bill, which will move to the full House for a vote.
Under the program, employees automatically would be enrolled but would be able to opt out initially or at any time.
It would deduct tax-deferred contributions from workers’ gross pay.
Those workers would decide whether to participate, select the deduction rate, increase or decrease deduction, freeze the automatic annual increase in the deduction rate, and choose investments for their accounts.
Employers would not be required to contribute.
Although some Republican members of the committee opposed the plan because they wanted to exclude part-time workers and some small employers, Republican state Treasurer Stacy Garrity endorsed it.
She noted that the savings plan would help individuals when they retire, and be a significant benefit for all state taxpayers because older people without retirement savings are more likely to depend on government services.
“If we do nothing, unprepared retirees will cost taxpayers more than $1 billion every year,” she said. “Keystone Saves … is a business-friendly way to tackle this problem and help people save for their own retirement.”
Darlene J. Robbins, president of the Northeast Pennsylvania Manufacturers & Employers Council, also endorsed the plan.
Keystone Saves could create a much more secure retirement for millions of Pennsylvania workers, including contractors and gig workers, while saving money for taxpayers.
The Legislature should approve it and the Treasury Department should implement it as soon as possible.