After Years fighting President Trump and Republican Congress
Who Sought to Block States & Cities from Providing Retirement Accounts to Residents this Groundbreaking Legislation Passes City Council Vote
New York, NY – At least 1.5 million private-sector workers in New York City that do not have access to retirement plans through their employers will finally get one as “Retirement Security for All'' legislation sponsored by Council Member Ben Kallos passed a vote the New York City Council. The bill received a public hearing in the City Council in September 2019 but stalled due to legal issues created by the Trump administration.
As a result of the new legislation employers with 5 or more employees that do not currently offer a retirement plan would be required to automatically enroll employees through payroll deduction. There would be no cost to employers with small employers and gig workers able to voluntarily join the program.
“Even in our beloved but expensive City where the cost of living is high, every New Yorker should be able to save for retirement. This legislation is a huge first step in helping generations of New Yorkers working for small businesses to save and be that much more ready to be self-sufficient when it is time to retire. With this legislation, New York City is leading the way by providing residents something in addition to their social security,” said Council Member Ben Kallos, who is an Employee Retirement Income Security Act (ERISA) attorney. “Thank you to Speaker Corey Johnson for prioritizing this and focusing on it so that it could pass into law today. I can't wait to help millions of New Yorkers to have a more secure future.”
New York State Attorney General and then Public Advocate Letitia James first authored the legislation now carried and championed by City Council Member Ben Kallos and Civil Service and Labor Committee Chair I. Daneek Miller, Int. 888 & Int. 901, that would allow every private-sector worker in New York City to save pre-tax for retirement even if their employer did not offer a 401K.
The plan met with uncertainty following the passage of House Joint Resolutions 66 and 67 by Rep. Walberg (R-MI) and Rep. Rooney (R-FL) on March 30, 2017 and signature by Trump on April 13, 2017, to roll back regulations permitting States and Municipalities to offer retirement savings plans. With the election of President Biden, New York City one of the largest municipalities in the nation has taken the opportunity to lead through this legislation.
In New York City, two-thirds of workers, more than 2 million people in 2009, did not participate in employer-sponsored retirement plans, largely because their employer didn’t offer one, according to a 2011 report by Comptroller John Liu. More than one-third of households led by a member who will become a senior citizen in the next decade will either be unable to retire or have to live on entirely or primarily on Social Security Income, according to the same report. The National Institute on Retirement Security predicts a United States retirement saving deficit of as much as $14 trillion.
"There are millions of New Yorkers that are in no way ready for retirement, which is a ticking time bomb for our social safety net. It wasn't always like this, and now that Donald Trump is behind us we are taking steps to make sure that people who have worked hard are ready for retirement. I'm proud that New York City is taking the lead on this, and I hope more cities and states follow suit. I want to thank Council Member Ben Kallos and Daneek Miller for their tireless work and leading the way to get us to the finish line," said Council Speaker Corey Johnson.
“Fulfilling the goal of retirement is fast becoming a lost tradition in America,” said Council Member I. Daneek Miller, Chair of the Committee on Civil Service and Labor. “People are working desperately to keep pace with ever-increasing living costs, but lack the means or direction to avoid falling into poverty in their later years. Our legislation will help more than half of working New Yorkers currently without a savings plan set aside a portion of their earnings so they can begin to lay a foundation for a stable future, and particularly benefit our communities of color who saw their average household wealth plummet for over three decades. I thank my colleagues for embracing this bold proposal that is needed now more than ever.”
“Too many hardworking New Yorkers face the frightening prospect of aging into poverty rather than retiring with dignity. We know that retirement plans can make all the difference, but more than a million private-sector workers in New York City have not had access to this benefit that is critical to their financial stability. I applaud Council Members Kallos and Miller for their work on seeing this legislation through,” said New York State Attorney General Letitia James.
“Automatic workplace retirement savings provide an easy pathway for workers to start building a safety net and grow the savings they need to take control of their future,” said AARP New York State Director Beth Finkel. “On behalf of our 750,000 New York City members, I thank the City Council for passing this critical program to help New Yorkers save at work. We appreciate the leadership of Council Speaker Johnson and Council Members Kallos and Miller in making this program a reality for our city’s workers.”
On April 12, 2018 Governor Andrew Cuomo signed budget bill S.7505C / A.9505D that established the “New York State Secure Choice Savings Program” as Article 43 of the General Business Law to provide employers that do not currently offer retirement savings to their employees with the option of offering a Roth individual retirement account (Roth IRA) managed by the State.
The legislation was originally introduced on April 25, 2017 and re-introduced on May 9, 2018. It consists of two bills Int. 1580 of 2015 now Int. 901 of 2018 to establish a board and Int. 1574 of 2015 now Int. 888 of 2018 to establish a plan. The Board would be established to administer the plan, engage in rulemaking, auditing, and reporting, along with public education and community outreach forums. The plan would cover all employers with more than ten employees that did not already offer a retirement plan. At no cost to the employer, private sector employees would be automatically enrolled, with an option to decline, in a payroll deduction pre-tax retirement savings plan administered by the City.
Council Member Kallos' work on Retirement for All dates back to 2015 when he was co-prime sponsor to legislation that studied the implementation of implement Retirement Security for All with then Public Advocate Tish James and Civil Service and Labor Committee Chair I. Daneek Miller. The bill was heard in committee in June 2015.
Unlike the New York State plan and similar to states like California, Connecticut, Illinois, Maryland and Oregon, the New York City legislation would mandate that certain employers automatically enroll their employees if they don’t already offer an option. The New York City plan would default to a Roth IRA with a contribution rate of 5% with an option to change rates or choose an IRA. Established in 2017 the state of Oregon’s plan OregonSaves now boasts more than 100 thousand accounts and nearly $100 million in assets. The average monthly contribution is over $100 with an opt-out rate of less than one-third.
In 2016, the new legislation was initially enabled by rules promulgated by the United States Department of Labor (RIN 1210-AB71) prior to the Trump administration stepping in to block it in early 2017. Kallos joined then Public Advocate James in a January letter advocating for cities to be empowered to offer Savings Arrangements Established by States for Non-Governmental Employees.
In 2015, Public Advocate James and Council Member I. Daneek Miller had introduced and heard Int. 692 to create a review board to study and issue a report regarding recommendations for the City to establish a retirement security program for private-sector workers.
Prior to their election, Kallos practiced Employee Retirement Income Security Act (ERISA) law at Gorlick, Kravitz, and Listhaus, representing laborers at the Mason Tenders District Council fighting for the retirements of workers and Miller served as President of Amalgamated Transit Union (ATU) Local No. 1056 and co-chaired the MTA Labor Coalition which represents 29 unions and more than 60,000 workers.