Philadelphia small businesses support the city setting up a voluntary retirement plan for them, according to a report released Wednesday by city Controller Alan Butkovitz showing that 60% of small businesses do not offer a retirement plan for employees.
The report analyzed two options: voluntary open multiple employer plans and government-mandated automatic-enrollment IRAs that several states have enacted or considered. It included a survey of more than 200 local small businesses, 92% of whom said they would support a city-sponsored retirement plan if it were voluntary.
Based on the findings, Mr. Butkovitz is advocating that the city create an open multiple employer plan for businesses to join voluntarily, with the city designating or creating an authority to administer and manage the plan. He also called for the city to conduct a financial and legal feasibility analysis to determine the implications, risk factors and sustainability of implementing a city-sponsored plan. “I urge City Council to aggressively adopt legislation that would establish this type of retirement plan,” Mr. Butkovitz said in a statement.
With federal legislation signed by President Donald Trump in May removing safe harbors for states and cities to create retirement programs for private-sector employees, “the federal government has made it even more difficult for private businesses and their workers to prepare for retirement,” and puts more pressure on local governments to act, he said.
“Expanding savings programs to small businesses gives employees an accessible retirement investment tool that could alleviate the cost of public assistance for the state and municipality,” he said in the statement.
The report is available on the controller's website.
Separately, Vermont Gov. Phil Scott was scheduled to sign legislation on Thursday creating the nation's first voluntary open multiple employer plan for the private sector. It should be in place by 2019.
Vermont Treasurer Beth Pearce, who advocated for it, said during a Georgetown Center for Retirement Initiatives seminar Wednesday that the proposal had nearly unanimous support, with only one legislator voting against it. Employers choosing not to participate will have other options made available through a marketplace to be set up later, she said.