Photo Courtesy of Demetrius Freeman/Mayoral Photography Office
Last February, Mayor de Blasio led a rally at City Hall in support of NYC’s push to become the first city in the country to create a retirement savings program for private-sector employees.
By Forum Staff
A new U.S. Department of Labor rule change clears a legal path for large cities and municipalities – such as New York City – to provide private-sector employees with a workplace retirement savings option if their employer does not already offer a pension or 401(k) plan.
The Labor regulation ensures that cities can create retirement savings programs without liability or burdensome requirements.
Mayor Bill de Blasio last February led a rally featuring City Council Speaker Melissa Mark-Viverito, Public Advocate Letitia James, Comptroller Scott Stringer, and a coalition of business, labor, and other leaders to support NYC’s push to become the first City in the country to create a retirement savings program for private-sector employees; Labor’s recent announcement has given the Big Apple the green light to set up such an option.
“All New Yorkers should have access to resources that will help them better plan for their future and provide peace of mind,” said Mark-Viverito. “Savings Access NY will do just that, while reducing the arduous steps and costly fees involved in setting up a retirement account. I’d like to thank my colleagues on the Council for their leadership on legislation that will help all New Yorkers build toward greater security in retirement, as well as Public Advocate Letitia James and Mayor de Blasio for their support on this important issue.”
According to the administration, most private-sector workers in the city do not have any access to a retirement savings program, disproportionately impacting low-income, immigrant, minority, and female residents:
• 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.
The City’s proposal would enable any New Yorker 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.
• 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.
