More than 2 million private-sector employees in Illinois will have access to retirement savings accounts under the Illinois Secure Choice Savings Program Act, which was signed Sunday by Gov. Pat Quinn.
The act creates an auto-enrollment, payroll-deducted retirement savings account for private-sector employees whose employers do not offer retirement plans outside of Social Security, have been in business for at least two years and have 25 or more employees.
Employees who do not opt out of the program would be automatically enrolled at a contribution rate of 3% on June 1, 2017. Employers will not contribute to the program.
The funds will be overseen by a seven-member board made up of the state treasurer, comptroller, director of the Office of Management and Budget or their designees, and four appointees made by Gov.-elect Bruce Rauner.
“The state will not have access to the funds as the investments are pooled as private property of the workers outside of the state treasury,” said a news release from Mr. Quinn's office.
An RFP for an external investment manager will be issued in the next two years, and the investment lineup will include target-date funds and perhaps a few other investment options, state Sen. Daniel Biss, sponsor of the bill, previously told Pensions & Investments.
“For many people across Illinois, retirement planning is often a matter of too little, too late,” Mr. Quinn said in the news release. “Without an adequate retirement savings plan, many people are forced to spend their later years scraping to get by with just Social Security. This legislation protects millions of private-sector employees in Illinois who work hard but do not have the option of a retirement plan through their employer.”
The act was passed by the General Assembly on Dec. 3.