NYC officials detail plans for private-sector retirement savings program
Sarina Trangle
About a month after New York City Mayor Bill de Blasio announced plans for the nation’s first city-run retirement savings program for private sector employees, several city officials and AARP members joined him in praising the proposal as a pioneering move.
De Blasio and his colleagues outlined plans for the so-called Security for All New Yorkers program Thursday, about a month after he called for creating a retirement savings program during his State of the City address.
“We’re going to be the first city in the country to create a retirement savings program because our people need it right now,” de Blasio said Thursday. “She [my mother] was working for Polaroid Corporation for the last decade or more of her career, and she called up one day in her retirement, and she said, ‘I got a letter and my pension has been canceled’ … Social Security, thank God, provides something, but it doesn’t provide – in many people’s cases – enough resources, certainly not in a city with the kind of costs we have.”
The city’s proposal is indeed novel. It is so new that it actually cannot move forward until the federal Department of Labor extends to cities the authority that states already have to manage a retirement system for private employees. The mayor estimated the city could get the federal OK on needed regulation changes this year. At that point, he said the City Council would revisit the legislation it has already drafted, hold hearings and ideally send him a bill to sign this year. Once legally authorized, the de Blasio administration anticipates spending another 12 to 18 months implementing and opening Security for All New Yorkers.
Under the city’s plan, workers at businesses with at least 10 employees would automatically be enrolled in Security for All New Yorkers and have a portion of their salary taken out through payroll. Employees could opt out of the city’s initiative or alter how much is deducted. Their accounts would transfer as they changed jobs.
Neither the city nor private businesses would contribute to the accounts, and businesses that already offer retirement savings programs could not drop theirs to enroll in Security for All New Yorkers. Once the system is approved, the city plans to establish a board to oversee management of the accounts, which would then be invested like public pensions are. Although employees would not be afforded any guarantee that their earnings would not be lost, de Blasio stressed that research shows savings is a safer option.
City Comptroller Scott Stringer, City Council Speaker Melissa Mark-Viverito and Public Advocate Letitia James highlighted statistics showing New York City residents are poorly prepared for retirement. Currently, 43 percent of working New Yorkers have access to a retirement savings plan. And of those who have saved, 40 percent of New Yorkers between the ages of 50 and 64 have less than $10,000 set aside for retirement.
“To successfully save for retirement, New Yorkers should have an easy-to-use savings mechanism, something that helps them take care of the future in the midst of their busy lives,” Mark-Viverito said.
When asked why he was not working within federal parameters and pushing for a state system, de Blasio said not all cities share the same goals as their state government.
“We obviously are a very large city with the capacity to reach our people, and we want to do that as quickly as possible,” de Blasio said. “And we think it’s important that cities have the opportunity to do it. Now remember there are some states – many states, in fact – where their state governments do not necessarily reflect the viewpoints of their cities.”