Employer-sponsored retirement savings plans can help workers secure a sound financial future.
But in Pennsylvania, where small businesses often cannot afford to offer retirement benefits, as many as 2 million private sector workers lack access to a workplace retirement plan. Business owners need a basic, no-cost retirement savings option until they can provide their own plan.
Helping more Pennsylvania residents save will also reduce the burden on taxpayers. A 2018 study of the fiscal and economic costs of insufficient retirement savings found that every county in Pennsylvania is experiencing a savings shortfall, resulting in increased public assistance costs, reduced tax revenue, decreased household spending, and lower employment.
The price tag of these savings deficiencies? An estimated $14.3 billion over 15 years—a burden that falls on Pennsylvania taxpayers.
But there’s good news: Legislation (H.B. 2156) introduced in the Pennsylvania General Assembly by Representatives Tracy Pennycuick (R-Montgomery) and Mike Driscoll (D-Philadelphia) would create Keystone Saves, a state-facilitated automatic enrollment retirement savings program. It would:
- Give businesses a no-cost retirement benefit for their workers.
- Help hard-working Pennsylvanians secure their financial future.
- Reduce the state’s $14.3 billion fiscal burden from low retirement savings.
The Keystone Saves program is intended for businesses without a retirement plan and would rely on voluntary regular payroll contributions to fund individual retirement accounts (IRAs). Keystone Saves would be a public-private partnership in which IRAs are professionally managed by a third-party financial firm overseen by the state. Administration and investment fees would be kept low through the economies of scale produced by a statewide program.