A Plan to Boost Savings at Work

By Ann Levin

As the longtime owner of a funeral home company in central New York, Gary Finch knows the importance of attracting and keeping high-quality employees.

That’s why Finch, who is also a Republican state assemblyman from Springport, supports a bill to set up a state-administered retirement savings program for workers at private-sector and nonprofit companies that don’t offer a plan.

“The business community is concerned about costs,” he said. “But you need to be able to keep good employees. They’re the most important part of your business.”

The bill, titled the New York State Secure Choice Savings Program, is one of many proposals nation­wide to address concerns that Americans are not saving enough for retirement.

At least five states—California, Connecticut, Illinois, Maryland and Oregon—have passed laws to set up such programs. New Jersey and Washington state adopted another model, launching online marketplaces to help business owners set up their own plans.

The New York bill would let workers contribute to a Roth IRA through an automatic payroll deduction. Accounts would be portable, and workers could decline to participate.

Employers with 25 or more workers who don’t offer another way to save on the job, such as a 401(k) plan, would be required to offer the program. It would be optional for companies with fewer workers.

The proposal will be AARP New York’s top priority when the state Assembly meets in January.

“A state-facilitated retirement savings option would help millions of private-sector workers across New York by providing an effective way for them to save their own money and create a financially secure future,” said Beth Finkel, AARP state director.

"Americans are 15 times more likely to save if their employer offers a plan, and New York’s Gen Xers and baby boomers overwhelmingly think this is the way to go.”

This year Gov. Andrew Cuomo (D) set up a commission to study the issue, noting that about 3.5 million New Yorkers—52 percent of private-sector employees—lack access to a workplace savings plan.

“Many of these workers face delayed retirements and reduced standards of living and will be forced to rely on the state’s taxpayer-funded social safety net,” Cuomo said.

Not enough to retire?
An AARP-commissioned survey by the Siena College Research Institute found that 60 percent of the state’s Gen Xers and boomers say they worry often or very often about having enough money to retire when they want and with the lifestyle they expect.

In the survey, 82 percent supported creation of a state-facilitated retirement savings plan.

The Business Council of New York State opposes the legislation, describing it as “another employer mandate” at a time when employers are gearing up to comply with New York’s new 12-week paid family leave law.

But the sponsor, Assemblyman Robert Rodriguez (D), of East Harlem, is optimistic about its chances in the coming year.

Rodriguez and Finch said administrative costs would be minimal. “We’re trying to make it easy for the business owner to offer a savings plan,” Rodriguez said.

He also said the bill would help address the low savings rate in the Hispanic community. An analysis last year by the AARP Public Policy Institute found that about 67 percent of Hispanic workers and 52 percent of African Americans lacked access to an employer-sponsored retirement plan.

“I want to increase savings and put ourselves as Latinos in the same financial position as other demographic and socioeconomic groups,” he said. “I want to make sure we don’t forget anybody.”

For Finch, it’s a matter of good business. “It gives employees a way to save for their retirement, and it’s totally their contribution. I can’t even begin to imagine it being antibusiness.”

To urge Cuomo to include the plan in the state budget, call 844-254-6881 toll-free.

Ann Levin is a writer living in New York City.