New York officials are championing auto-IRA legislation that would address what they say is a gaping hole in retirement savings for private-sector workers in New York City.
However, the federal government is showing signs it could challenge these jurisdictional plans under the Employee Retirement Income Security Act.
Retirement Security for All, as the initiative is called, is part of Mayor Bill de Blasio’s push for workers’ protection and benefits.
The mayoral-led initiative builds upon efforts in previous years through bills that would empower a new retirement savings board to offer individual retirement accounts for New York City businesses with 10 or more employees.
The initiative would apply to private-sector workers, a “staggering 60%” of whom have no access to a retirement plan, according to a statement from New York State Attorney General Letitia James.
An AARP representative said Monday at a media briefing heralding the legislation that there are “over 2 million people that will be covered by this law.”
The mayor’s office maintains that 40% of New Yorkers between the ages of 50 and 64 have less than $10,000 saved for retirement.
The features of the proposal consist of an IRA that would have automatic enrollment for firms that don’t already have one.
Retirement Security for All would also contain an opt-out component for employees as well as an ability to change their contribution rates, according to the proposal.
Also, the IRAs would be portable — the payroll deduction pretax savings accounts would travel with the employee from job to job.
The enrollment would cover part-time workers of 20 hours a week or more and full-time workers.