The Illinois General Assembly passed the Illinois Secure Choice Savings Program Act, which creates an auto enrollment, payroll-deducted retirement savings account for private-sector employees whose employers do not offer retirement plans.
The act was passed by the General Assembly on Wednesday and awaits Gov. Pat Quinn's signature. The Senate passed an earlier version of the bill in April.
The program covers companies with 25 or more employees that have been in business for at least two years and do not currently offer a retirement plan. Employees who do not opt out of the program would be automatically enrolled at a contribution rate of 3%. Enrollment would begin on June 1, 2017. Employers do not contribute to the program.
State Sen. Daniel Biss, sponsor of the bill, said an RFP would be issued over the next two years for an investment manager to invest plan assets. The investment lineup will include target-date funds and perhaps a few other investment options, Mr. Biss said.
Mr. Biss said the program encourages more employees to set aside money for their retirements. Many employees who aren't offered a payroll-deducted retirement savings vehicle won't save for retirement, he said.
Retiree advocacy group AARP applauded the bill's passage.
“Social Security was never meant to be a worker's sole source of retirement income — it is simply not enough to live on. Private savings is a huge piece of the retirement security puzzle. That's why AARP fully endorsed Senate Bill 2758 and we urge Gov. Quinn to sign the bill into law,” the organization said in a news release.
A spokesman for Mr. Quinn did not return a telephone seeking comment on whether the governor intends to sign the bill.