Gov. Pat Quinn said a bill he signed Sunday will give 2.5 million workers in Illinois a new way to save for retirement without relying on Social Security alone.
The Illinois Secure Choice Savings Program, established by the bill, creates a retirement savings option through a 3 percent payroll deduction for private-sector employees whose employers do not offer a retirement plan. Employers that have been in business for at least two years and employ 25 or more workers are required to participate.
Eligible workers may opt out of the program or change the deduction.
Before signing the bill, Quinn said a third of Illinois retirees rely on Social Security for at least 90 percent of their income. And he said the median amount saved for retirement by workers who don’t have a savings plan at work is $3,000.
“We think it will be a model for many, many other states,” Quinn said of the law. “Because one of the leading causes of worry for everyday people who are working hard, raising kids, doing the right thing, is how much money they will have when they pay their kids’ college tuition, when they’ve paid all their bills, will they have any money left for their retirement so they can live out their years in dignity?”
A seven-member Illinois Secure Choice Savings Board will pick a private firm to manage the program’s funds, according to the governor’s office. It said the state won’t have access to the money because it will be pooled as the private property of the workers outside of the state treasury.
The bill creating the program was sponsored by House Majority Leader Barbara Flynn Currie, D-Chicago, and Sen. Daniel Biss, D-Skokie. Quinn said, “to be blunt, it was a Democratic initiative.” But Currie said the idea came from the Heritage Foundation, a conservative think tank.
“This is not a liberal, pie-in-the-sky proposal,” Currie said.
Treasurer-elect Mike Frerichs and Comptroller Jerry Stermer said the next step will be to implement and educate people about the program.
“There’s an awful lot of work still ahead of us,” Frerichs said.