As part of a program to make the Big Apple the “Fairest Big City in America,” New York City Mayor Bill de Blasio has a plan for retirement savings.
Specifically, noting that fewer than half of all working New Yorkers have access to a plan that can help them save for their retirement years and 40% percent of New Yorkers between the ages of 50-64 have less than $10,000 saved for retirement, Mayor de Blasio is proposing to provide access to Individual Retirement Accounts (IRAs) for all working New Yorkers.
Mayor de Blasio says that he will work with the City Council to pass legislation in 2019 that requires all employers with at least five employees to either offer access to a retirement plan or auto-enroll their employees in to the city plan with a default Roth IRA contribution of the employees’ own earnings of 5%, which can then be increased or reduced by the employee.
According to a fact sheet on the proposal:
- Employees can choose from a limited menu of low-cost investment options.
- The city’s Retirement Security Fund will be overseen by a board of appointees, managed by a private third party administrator and invested in low-cost indexed mutual funds.
- The city will subsidize start-up costs, but the program will be funded by the “low fees” charged to participant accounts.
In 2016, New York City Comptroller Scott M. Stringer unveiled a similar city-run retirement plan for private sector workers, including a city-sponsored multiple employer plan (MEP), but it wasn’t pursued in the wake of legislation signed by President Trump that blocked the Obama-era DOL’s safe harbor exempting states’ and municipalities’ auto-IRA programs from ERISA.
The proposal must be approved as legislation by the City Council. If it is approved this year, the program would be open to participation by 2021.