State Pension Plan Would Save Taxpayers |

About two million private-sector workers in Pennsylvania — more than 40% of the workforce — don’t have access to an automatic retirement savings plan from their employer. The resulting pension deficit is expected to cost Pennsylvania about $1 billion in social services each year for the next 15 years.

Keystone Saves, a program currently being considered by the state legislature as HB 2156, would provide a free retirement savings option for workers whose employers do not offer such plans. Various private organizations, including AARP, United Way, and the Pew Charitable Trusts, support him. So is a broad-based bipartisan coalition, including Republican State Treasurer Stacy Garrity, Democratic State Representative Michael Driscoll of Philadelphia and Republican State Representative Tracy Pennycuick of Montgomery County. Various Pittsburgh-area lawmakers from both parties have co-sponsored the bill.

According to supporters of Keystone Saves, workers are 15 times more likely to contribute to a retirement account if it is offered to them through their job, rather than setting up an IRA themselves. Visualizing the future is difficult, and understanding how even small contributions early in life can yield big rewards later on isn’t always intuitive – even more so when you’re just trying to make ends meet here and now.

Retirement? When you’re 20 and trying to make rent? When you’re 50 and trying to pay the mortgage and send your kids to school?

The wealthiest Americans have access to professional financial planners who can do all the heavy lifting for them. The fact that advanced degrees and certifications are required to properly plan this planning shows how complex it can be.

Keystone Saves would allow employers who cannot afford or manage a retirement system themselves to opt into a free, state-facilitated system similar to the existing 529 Education Savings Accounts. All employers would have to do is provide a list of participating employees to the state and make a simple payroll deduction. Keystone Saves would do the rest, putting the money in a simple, portable IRA for workers.

The program would not discourage employers from offering their own pension plans, for two reasons. First, companies with already existing pension schemes will not be eligible. Second, since employers don’t contribute to Keystone Saves, many companies will still want to entice workers with more generous employer matching plans.

We urge the legislature to quickly pass Keystone Saves. Pennsylvania’s workers and the state’s future economy need it.

— Pittsburgh Post-Gazette

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