New York CIty Council Member Ben Kallos

New York Daily News All New Yorkers deserve retirement security by By I. DANEEK MILLER and BEN KALLOS

All New Yorkers deserve retirement security

New Yorkers face the same problem as many Americans: employers do not provide a retirement plan at work. If we don’t address our inadequate retirement system, 2 out of every 5 older American households will fall into poverty or near-poverty when they retire at 62. Along with this human toll, massive downward mobility among the elderly will hurt our economy, cutting demand and jobs while increasing the need for more government and social spending.

Due to federal inaction, 43 states (and the city of Seattle) have made various proposals to expand their residents’ access to retirement coverage. New York State is one of 11 that has passed reforms into law.

Some plans are better than others. New York State’s plan, while a good first step, doesn’t do enough to address this crisis. That's why we introduced legislation in the City Council to guarantee coverage to private-sector workers who today have none. According to the Schwartz Center for Economic Policy Analysis, this legislation would provide coverage to 2.8 million city residents.

New York City’s retirement plan coverage rate - 35% - is the lowest recorded since the Census Bureau began tracking coverage in 1980. Barely over one in three working New York City residents have any retirement coverage other than Social Security. The city’s coverage rate is 5 percentage points lower than the national average and 7 points lower than the rest of New York State.

However, averages hide persistent disparities based on race and income. The retirement gap is most stark for New Yorkers of color. In New York City, the coverage rate for black workers is 33 percent, while for Asian and Hispanic workers it is 27 and 26 percent, respectively. Coverage is lower for workers in the bottom half of the income distribution—those who need it most. Just 25 percent of them have a retirement plan.

The benefit of tax-advantaged retirement accounts at work is that savings are automatically deducted from income. Without this, workers are left on their own to save. And it is not surprising - nor is it their fault - that they don’t. The median total retirement balance for American workers near retirement (ages 55 to 64) is just $18,000. The city’s lower coverage rate means New Yorkers have even less.

New York State recently passed the Secure Choice Savings Program – the first step in addressing gaps in coverage. It models plans in Illinois and Oregon that offer state-facilitated individual retirement accounts (IRAs), known as auto-IRAs, to workers whose employers don’t offer a plan. These plans allow employees to save through automatic deductions. Oregon’s program is in its second year of operation and has enrolled over 100,000 workers. Oregon hopes to provide coverage to half a million private-sector workers. Illinois’ program, open only since January of 2019, has enrolled more than 24,000 workers, helping them save more than $5 million.

New York State’s plan left out the key feature that makes these programs a success: a mandate. The Oregon and California plans require employers to sign their employees up for the program. New York State’s auto-IRA plan is voluntary, essentially the system we already have, where employers decide whether to offer retirement plans. This doesn’t work.

This detail makes all the difference. Without requiring employers to participate, we cannot guarantee our workers a way to save. New York City’s strong union tradition has delivered retirement benefits for many. For workers without an organized voice in the private sector, we must mandate employers to offer a retirement plan to extend benefits to future generations.

That’s why we introduced legislation that will create a required program for workers in the city. Our plan requires employers with more than 5 employees to automatically deduct a percentage of their workers’ pay and forward it to city-facilitated, not-for-profit IRAs. Such accounts will be individually owned and professionally managed by an independent board. While employers are required to participate, employees maintain the right to change their contribution rates or opt-out of the program.

What we need now is leadership. Luckily, this is where New York excels. By approving this plan in the City Council, we’ll build on our long progressive legacy of social policy through city- and state-level struggle and innovation.

Kallos represents district 5 in the City Council. Miller represents the Council’s 27th district and is chair of the Committee on Civil and Labor.


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