The New York City Council on Thursday voted to approve a new city-sponsored retirement plan for small businesses without a retirement plan and self-employed individuals.
The council voted 45-3 in favor of the measure, which creates the "auto-IRA" program.
The proposed plan would establish an automatic default employee contribution rate of 5% of wages, up to the annual IRA maximum of $6,000 below age 50 and $7,000 for ages 50 and above. Small businesses with five or more employees that do not currently sponsor a retirement plan, as well as self-employed individuals, would be eligible to participate in the program. The Retirement Security Plan would also be portable and employers would not provide any contributions.
According to a report Thursday from the council's committee on civil service and labor, only 33% of New York's private-sector workers between the ages of 25 and 64 were participating in a workplace retirement plan in 2016, down from 39% in 2006.
The council also voted 45-3 on Thursday in favor of the creation of a board overseeing the retirement savings plan, which would consist of three members who are appointed by the mayor and would work with the New York City comptroller (who is also the sole fiduciary of the $228.7 billion New York City Retirement Systems) to select investment strategies and policies.
The bill creating the plan would take effect in 90 days, but the retirement security board has up to two years after its enactment to implement the plan itself.
Laura Feyer, deputy press secretary for Mayor Bill DeBlasio, said in an email, “The mayor has championed this issue and strongly supports the bill.”