Illinois to move forward after Congress blocks states’ retirement plans
CHICAGO — Illinois vows to move forward in offering a retirement savings plan despite federal legislation that is against it.
The U.S. Senate passed a bill that blocks states from launching programs that automatically enroll people into IRA-type plans. President Trump plans to sign it into law.
This would affect retirement savings programs designed for people whose employers do not offer 401K’S or pensions.
“Their hypocrisy is galling,” Illinois Treasurer Mike Frerichs said of Congress to the Chicago Tribune. “They complain about big government and say they support state’s rights. But they don’t want states to innovate. They just cast a vote for big federal government.”
Illinois’ two democratic senators are also speaking out.
“This is just going to make it harder for working families to save for retirement,” Sen. Tammy Duckworth said. “And it’s an interference with states’ rights.”
Senator Dick Durbin released a statement, “This vote is an attack on working families—it will make it unnecessarily difficult for 1.5 million working Illinoisans without access to one of the only viable means they have to save for retirement. Already, tens of millions of Americans have very little savings for retirement—this move will make that crisis worse Congress should be making it easier for more Americans to retire with dignity and security.”
Republicans say the state programs discourage small businesses from offering retirement plans.
“(State-run plans) might not seem too bad on the surface, what they really add up to is more government at the expense of the private sector and American workers,” said Senate Majority Leader Mitch McConnell.
If the President signs the repeal, states can still set up retirement plans but they must follow federal laws that protect the workers’ investments, McConnell said.
Illinois plans to put its Secure Choice plan into effect next year.
It’s a voluntary retirement program that could serve at least 1.5 million people.
The program requires employers, that have more than 25 workers and do not offer their own retirement plans, to give the employees the option of depositing 3 percent of their pay in a state-run retirement plan.
A worker has the option of opting out.
The plan can be moved if the worker finds a different job.