At the end of April, the New York City Council took a bold step and approved a city-sponsored retirement plan for private-sector employees who do not have retirement coverage at work, creating the city’s first ‘auto-IRA’ (individual retirement account). SCEPA’s Retirement Equity Lab, which testified in support of the policy, estimated the New York auto IRA plan will provide coverage to 2.8 million city workers that today have none.
Mayor de Blasio signed the bill last week implementing the city’s auto-IRA program.
The NYC Auto IRA Bill Is Well- Designed
Employers with more than five employees will have to automatically deduct a percentage of their workers’ pay and forward it to city-facilitated, not-for-profit IRAs. (Employers with less than five employees, self employed, and gig workers need to voluntarily join.) Auto IRA account’s are individually-owned and professionally managed, and administered by an independent board headed by city-appointed trustees. While employers are required to participate, employees would have the right to change their contribution rates or opt-out of the program. The plan is also portable; participants can maintain their accounts when they change jobs.
Author(s): Teresa Ghilarduci
Publication Date: 19 May 2021
Publication Site: Forbes
Readers, I have long been of the opinion that it’s a sensible approach to enable savers to choose among multiple retirement funds, so that they are able to reflect their particular ethical concerns, whether this means an “ESG” (environmental, social, and governance-issue focused) fund or a religious-screening approach, such as excluding companies which donate to Planned Parenthood (Ave Maria Funds) or which are in the alcohol industry (GuideStone Funds).
But no state official should be using investors’ money to play politics — not the money of individual investors through state-run IRAs or the retirement savings accounts of state employees, and not the money of public pension funds. And, frankly, I find it appalling that these sorts of actions aren’t universally considered to be wholly out of bounds — but I suppose living in Illinois (newly-declared the third-most-corrupt state, with Chicago as the most-corrupt city), I suppose I should lower my expectations. Readers in the remaining 49 states, however, should watch carefully.
Author(s): Elizabeth Bauer
Publication Date: 28 February 2021
Publication Site: Forbes