PA Treasurer, Lawmakers Propose ‘Auto-IRA’ To Aid Those Lacking Options To Save For Retirement

By Dave Lemery | Watchdog.org

The number of Pennsylvania workers who are not putting aside any money whatsoever for their retirement is increasingly seen as a crisis in the state.

“Right now, there are 2.1 million working Pennsylvanians who don’t have access to a retirement savings plan through their employer,” Pennsylvania Treasurer Joe Torsella said at a news conference last week to discuss the findings of the Retirement Security Task Force. “And without an easy ‘set it and forget it’ way of saving in the place that you work, the truth is, you will probably never save.”

Flanked by an array of both Democratic and Republican lawmakers from both the Senate and the House of Representatives, Torsella proposed a solution to this issue – legislation to establish “Auto-IRAs” in the state.

Auto-IRAs, first proposed by the Heritage Foundation, are intended to be retirement accounts that are available to all workers without any requirement that the employer administer or contribute to the accounts. The program is supposed to become self-sustaining over time, with contributions covering administrative costs and payouts.

“[It’s] a portable solution that will follow these workers around from job to job through the course of their lives, and give them an easy and convenient way to save for their own retirement,” Torsella said. “Over time, the plan itself will be financially self sustaining, and it will not cost business owners in Pennsylvania one dime, nor will it require them to be exposed to any liability.”

Sen. Pat Browne, R-Allentown, the influential chairman of the Senate Appropriations Committee, spoke favorably at the news conference of Torsella’s efforts to help ensure financial stability for Pennsylvania’s seniors.

“This type of action, on a collective basis, on a bipartisan basis, will do a lot to reinforce our financial position here in Pennsylvania, and make all the other challenges we have a lot less challenging,” Browne said.

Rep. Matthew Bradford, D-Norristown, the minority chairman of the House Appropriations Committee, was similarly laudatory of the work of Torsella and the task force.

“This is an idea that can be done with little inconvenience to labor and to the employee and to our small business owners,” Bradford said. “It’s an idea that’s time has come. I think without Treasurer Torsella’s leadership, I fear it may not have happened.”

Torsella emphasized that that action is needed not only for the workers themselves who might face financial insecurity in their declining years, but also that there was a cost to all Pennsylvanians when large segments of the population don’t have retirement savings.

“The retirement crisis will not just cost our friends and neighbors the ability to retire comfortably, it’ll cost Pennsylvania’s general fund billions of dollars,” he said. “Over the next 15 years, the lack of sufficient retirement savings is projected to cost the state an additional $14.3 billion in assistance to elderly Pennsylvanians who have not saved enough for retirement.”

But the treasurer said that the Auto-IRA, if passed into law, would be a powerful tool in turning the tide on those worrisome numbers.

“One payroll deduction could set 2.1 million Pennsylvanians on a path to retirement security,” he said. “One payroll deduction could help the commonwealth avoid $14.3 billion in additional assistance costs and prevent billions of dollars in revenue from being lost. And one payroll deduction could be life changing.”