New York City Comptroller Scott M. Stringer on Friday announced a three-pronged approach to expand opportunities for private-sector employees in the city to improve their retirement savings.
Under the umbrella title of “New York City Nest Egg,” Mr. Stringer proposed creating:
- The Empire City 401(k), which would enable employers to join a single, publicly sponsored 401(k) plan based on a new federal law allowing multiple employers that are unaffiliated to join a single plan.
- The NYC 401(k) Marketplace, a voluntary exchange overseen by an independent board that would offer employers a choice of “screened, competing 401(k) and other retirement plans from private and public providers,” according to a news release.
- The NYC Roth IRA, an automatic default designed for eligible private-sector employers that do not select a plan on their own or through the NYC 401(k) Marketplace. Their employees would be automatically enrolled in a payroll-deduction IRA, which is not subject to ERISA. Employees could opt out at any time. “Research shows that automatic enrollment in retirement savings accounts vastly improves participation, so employers would be required to automatically enroll eligible employees,” the news release said.
Fifty-eight percent of New York City's private-sector employees lack access to a retirement plan, and that rate is 89% for companies with fewer than 10 employees, Mr. Stringer said in the news release. He is the fiduciary of the five public pension plans within the $163.1 billion New York City Retirement Systems, which is not affected by any of the proposals he announced Friday.
“Unless we act now, what should be the golden years in America's largest city may well become the darkest years for too many people and a burden for future taxpayers who would be called upon to support a growing population of low-income seniors,” he said.
Tyrone Stevens, a spokesman for Mr. Stringer, said the proposed program would need approval by the City Council and possibly by the New York state Legislature.
The proposed program would be supervised “by an independent board of experts whose responsibility would be to protect the best interests of participants,” the news release said. “The board would periodically select investment management, administrative and education providers through a transparent competitive bidding process.”
“We welcome the latest input from the comptroller, and we're glad to have support from anyone who wants to help in that effort,” Freddi Goldstein, a spokeswoman for Mayor Bill de Blasio, wrote in an e-mail.
Mr. de Blasio proposed a private-sector retirement plan — called Savings Access NY — in February. “We are currently awaiting a final rule from (the Department of Labor) so we can move forward,” Ms. Goldstein added. “In the meantime, the de Blasio administration has been working aggressively toward the creation of new retirement security options for those New Yorkers that currently have no workplace retirement plan.”