Photo Courtesy of the Comptroller’s Office
Last October, City Comptroller Stringer released a plan to help NYC residents working in the private sector save for retirement.
By Michael V. Cusenza
The U.S. Senate recently voted to overturn the Department of Labor’s rule that cleared 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.
“Republicans in the Senate just voted to make it harder for Americans to save for retirement,” said City Comptroller Scott Stringer. “This vote was an active, willful attempt to undermine the economic security of Americans, made possible by the elected officials who are supposed to represent their interests.”
The DOL regulation ensured that cities can create retirement savings programs without liability or burdensome requirements.
“Every New Yorker and every American should be able to save for a lifetime. But instead of lifting them up, Republicans in the Senate have sold out hardworking families who want to have secure retirements,” the comptroller added. “This vote hurts the 1.5 million New Yorkers — over 58 percent of private-sector workers — who don’t have access to retirement accounts at work. If the GOP wants to foment economic insecurity across America, then that goal is closer to being achieved today. This vote is wrong for New York and it’s wrong for America.”
Last October, Stringer released “The New York City Nest Egg: A Plan for Addressing Retirement Security in NYC,” that, he said, takes an innovative, market-driven approach to providing private–sector employees access to a retirement plan at their workplace.
The “Nest Egg” proposal, according to Stringer, “offers the best chance to protect hundreds of thousands of New Yorkers who would otherwise face retirement struggling to pay rent, cover medical bills, or put food on the table, especially now that retirement could last 20 or 30 years. Today, 58 percent of private sector workers in New York City have no access to a retirement plan at work – and for those at companies with fewer than 10 employees, that number jumps to 89 percent. Unless we act now, what should be the golden years in America’s largest city may well become the darkest years for too many people and a burden for future taxpayers who would be called upon to support a growing population of low-income seniors.”
Additionally, in February 2016, the City proposed a plan that would enable any New Yorker working at a business with 10 or more employees to automatically enroll in an employee-funded retirement program:
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 an outreach and education effort on the program.
However, last week’s Senate vote places any and all private-sector retirement program proposals in jeopardy.