PHOTO: Mayor de Blasio said his administration is crafting a plan to become the first city in the country to create a retirement savings program for private-sector employees. Photo Courtesy of Michael Appleton/Mayoral Photography Office
By Michael V. Cusenza
The de Blasio administration has begun to collaborate on an initiative that, when executed, will cast the Big Apple as a pioneer in pension planning.
De Blasio, City Council Speaker Melissa Mark-Viverito and Public Advocate Letitia James recently announced that New York is working to become the first city in the country to create a retirement savings program for private-sector employees.
Most private sector workers in the five boroughs do not have any access to a retirement savings program; and low-income, immigrant, minority, and female residents are disproportionately impacted: Only 43 percent of working New Yorkers have access to a plan that can help them save for retirement, de Blasio noted. Those that do have access often face large fees, because they do not have the leverage provided by a collectively-pooled savings program.
Even residents who have started to save do not have much: 40 percent between the ages of 50 and 64 have less than $10,000 saved for retirement.
“We won’t accept a status quo where people work all their lives only to be left with nothing,” he said.
De Blasio, Mark-Viverito, and James have pledged to draft legislation that would enable any resident working at a business with 10 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, de Blasio noted.
Contributions would be exclusively from employees, 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. De Blasio also promised that the City will undertake an outreach and education effort on the program.
“Thinking about pensions, thinking about the fundamental retirement security that so many Americans used to have and now, relatively speaking, so few have, we said ‘Okay, if we’re going to reconstruct that reality of actual, meaningful retirement security, what can the City do on its own?’” de Blasio said in a radio interview on Sunday. “Well, we realized what we could do was require the employers of the city – in this case it’s any employer with ten or more employees – to have to offer a voluntary plan. That’s something the City would manage, and we would put some initial investment into, and it would give every worker an opportunity to join a retirement security plan that they could really depend on, would not evaporate, because it would be supported and backed by the City of New York, and yes, it would mean putting their own resources into it. But it would be in a way that was accessible, it would be in a way that they could have a sense of a guarantee and security with. And simply providing working people with that option would mean more and more would actually have a foundation for meaningful security later on.”
