Seattle Mayor Proposes Private-Sector Retirement Plan

Seattle workers whose employers do not offer a retirement plan will have access to one through the city if a proposal by Mayor Jenny Durkan (D) is enacted.

On Oct. 10, then-Mayor Tim Burgess (D) sent legislation to the Seattle City Council to establish the Seattle Retirement Savings Plan (SRSP). The proposal is intended to provide coverage for the 40% of Seattle workers overall, and 68% of Seattle employees of small businesses, who lack access to a retirement plan through their employer.

Durkan’s 2018 budget proposal includes a provision that would establish the SRSP, a program that would:

  • be comparable to a DC plan through which employees contribute to their own separate accounts and are responsible for selecting investments from professionally managed product options available in the SRSP;
  • automatically enroll eligible employees in the plan, and allow them to opt out or stop participating at any time;
  • initially assign employees a default investment product that is appropriate for their age and corresponding risk profile, such as a low-fee target date fund;
  • allow employees to determine how their accounts are invested by choosing from a menu of investment products offered by financial firms that have been screened and selected by a Seattle Retirement Savings Plan Board, which would be formed if the Seattle City Council adopts the SRPS plan;
  • allow employees to increase their retirement savings through additional contributions and investment performance;
  • allow accounts to be portable and remain with participants if they change employers; and
  • require employers to perform a limited administrative function by processing payments of eligible employees to the third-party private administrator through their existing payroll system.

Durkan proposes that the city conduct a market feasibility and legal analysis to determine how best to proceed. Her office envisions that the SRSP would entail one-time start-up costs and ongoing expenditures. It also proposes that a small administrative fee be automatically deducted from each employee account, which it says would make the SRSP self-sustaining after an initial period.

The proposal also states that the city would not be responsible for the performance of investments employees select by from the menu the SRSP Board establishes.

Add Your Comments

One Comment

  1. tracym2
    Posted December 15, 2017 at 10:56 am | Permalink

    Does the statement on the proposal, that the city would not be responsible for the performance of investments, actually get the city out of fiduciary responsibility for investment monitoring for the investment menu, or for providing education to the participants?

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