Editorial: All workers should have saving option
SCRANTON TIMES TRIBUNE
By the Editorial Board, April 23, 2019
Social Security always was intended as a bulwark against poverty in retirement rather than as a comprehensive retirement plan, and the program faces challenges to meet even that low bar.
Yet, more than a third of workers in Pennsylvania, 2.1 million out of a workforce of 5.9 million, do not have access through work to retirement savings accounts or pension plans to be less dependent on the safety net.
Almost all of those people work for small companies that do not offer retirement benefits.
Under a bipartisan plan promoted by Democratic state Treasurer Joe Torsella with support from House Finance Committee Chairman Rep. Michael Peifer, a Pike County Republican, those workers would be able to build toward retirement security through a program overseen by the state Treasury Department.
The proposal would be similar to 401(k) accounts. Workers would make tax-deferred contributions to individual accounts that would stay with them if they change jobs. Employers could but would not be required to contribute.
As with a state-run college savings plan that has assets of $5 billion, the Treasury Department would oversee the plan but would hire a private contractor to manage the accounts, which would be paid from the plans’ earnings.
When legislation is developed to create the program, it should include two crucial features. Employers will not be required to contribute but they should be required to participate so that the plan will be available to all workers. And workers automatically should be enrolled, with the option to opt out, to ensure the broadest possible participation.
Six other states have adopted similar programs, led by Oregon. Since 2017, according to the Associated Press, OregonSaves has enrolled 76,500 workers and accumulated more than $17.5 million in assets.
A Pennsylvania program would help retirees and all state taxpayers by creating more self-sufficient retirees and reducing pressure on publicly funded safety-net programs.
The Legislature should move quickly to establish the retirement savings plan.