Secure Choice, a new retirement saving program adopted by Illinois, is the first in nation to automatically save for workers, and, is a step toward retirement system reform. Starting in 2017, Illinois residents who have jobs but don’t have retirement plan from work will be automatically enrolled to set an individual account for retirement savings through a three percent deduction directly from their paychecks. Although participation is mandatory for employers with at least 25 employees, administrative and cost burden won’t increase much because it will be limited to a payroll deduction and cost will be paid by savers. Automatic enrollment and direct deduction from workers’ paycheck will lead to more savings and is estimated to have up to two million enrollment.
See Josh Barro, “Illinois Introduces Automatic Retirement Savings Program, a First for the Nation,” The New York Times (January 5, 2015).
Posted by Jiaqi Wang, Associate Editor, Wealth Strategies Journal.