Illinois State Treasurer's Office, Springfield, hired BlackRock (BLK), State Street Global Advisors and Charles Schwab Investment Management as investment managers for the Illinois Secure Choice Savings Program, said a news release from the treasurer's office Friday.
The program, which is set to launch with a pilot in May and officially in October, is an auto-enrollment, payroll-deducted retirement savings account for certain private-sector employees whose employers do not offer retirement plans. The employers must have been in business for at least two years and have 25 or more employees.
The investment lineup consists of four investment options — a suite of target-date index funds managed by BlackRock, a capital preservation option managed by SSGA, and a bond index option and equity index option managed by Charles Schwab.
Employees who do not opt out of the program will be automatically enrolled at a contribution rate of 5%.
The program is expected to be self-sustaining at no additional cost to the state outside of startup administrative costs, which are expected to range from $5 million to $8 million. .
Ascensus will run the program's day-to-day operations.
The Secure Choice program was passed by the Illinois Legislature in December 2014 and signed into law on Jan. 4, 2015.
Illinois joins a number of states that have moved ahead with private-sector employee programs despite congressional resolutions last year to prevent these programs. A spokesman for Treasurer Michael W. Frerichs said that the treasurer's office is prepared to address legal challenges that arise as a result of Congress' actions as needed.
"Secure Choice is needed because half of Illinois' private-sector workers do not have access to an employer-sponsored retirement plan," the release said.
"When fully implemented, the program is expected to cover 1.2 million workers directly through Secure Choice or because an employer chose to initiate its own retirement plan."