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EDITORIAL: Make enrollment in state retirement savings plan automatic

Maybe you’re young enough not to worry too much about it.

Or maybe you’re coming into those years where you start to worry a bit.

Or you may be in a complete panic.

If you haven’t saved for retirement, you have a limited number of choices: You can either keep working forever, plan to live in poverty, give your children to support you, or start saving now until it’s too late.

If your employer does not have a pension savings plan in place for you – a pension or a 401 (k) or something similar – your options are even more limited.

That’s why it’s important for Governor Andrew Cuomo to quickly sign a law that would require employees of certain companies to be automatically enrolled in a new state-run pension savings plan.

The New York Savings Program, which is included in the 2018/2019 state budget, but has yet to be fully implemented, requires employers with at least 10 employees, who have been in business for at least two years and who do not offer a “qualified” pension plan. participation in the program.

Participating employers are forced under the original law to simply distribute program information to employees and to collect and send to the state payroll deductions. Companies are not forced to manage the program or pay for it.

The law, which was passed with huge bilateral support in June (A3213A / S5395A) would automatically enroll employees in the program unless they are excluded.

Employee contributions are determined at a set rate of 3%, but eligible employees can choose a different rate. Contributions are limited to the federal limits of the IRA, and the program will only use Roth’s IRAs.

Automatic enrollment would increase enrollment in the program and potentially help more than 2.5 million New Yorker employees in the private sector, ages 18 to 64, begin to build eggs for their post-employment years.

Studies show that employees usually do not participate in retirement savings programs unless they are forced to, hurting themselves and their families in the long run.

Enrollment jumps from about 70% to 90% participation with automatic enrollment. These groups are least likely to participate if young people, low-income workers and minority groups do not automatically enroll.

Therefore, it is vital that the state registers all eligible employees and contributes.

The law has the support of AARP New York and about twenty other organizations that signed a letter to the governor late last month asking him to sign the law.

The governor should not waste more time on the adoption of this law.

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Categories: Editorial,, Opinion