Labor Secretary Perez, Illinois
Treasurer Frerichs Announce Path for State-Based Retirement Programs
Proposed Rules Impact Nearly 1.2 Million
Illinois Workers, Could Impact Half of Workers Nationwide
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[November 18, 2015]
CHICAGO
- U.S. Secretary of Labor Thomas E. Perez and Illinois State
Treasurer Michael Frerichs on Monday announced sweeping new rules
outlining the path forward for state-sponsored retirement savings
initiatives. Secretary Perez and Treasurer Frerichs listened to
leaders who worry that the looming retirement savings crisis will
have a profound impact on lower-income workers’ quality of life in
retirement and become an untenable burden on states.
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The Department of Labor’s proposed rules will dismantle barriers
for state-based solutions to the retirement savings crisis,
including Illinois’ Secure Choice Retirement Savings Program.
Already, 26 states, including Illinois have taken some type of
action to pursue state-based retirement savings solutions that will
increase access to employer-based savings programs.
“Secretary Perez’s leadership today will benefit generations of
Americans,” Frerichs said. “In Illinois nearly 1.2 million workers
are poised to benefit from our Secure Choice Retirement Savings
Program. With these new federal rules, my administration can move
forward with helping some of our state’s most vulnerable workers. I
applaud Secretary Perez and the Department of Labor for partnering
with states like Illinois to craft a solution.”
![](http://archives.lincolndailynews.com/2015/Nov/18/images/ads/current/charrons_bch041713.png) Nationally, only half of working Americans save for retirement,
according to the Survey of Income and Program Participation by the
U.S. Census Bureau. Of those who do not save, 84 percent work for an
employer that does not offer a retirement savings vehicle. A lack of
retirement savings increases the likelihood that workers will be
over-reliant on social security or retire into poverty, creating
significant future burdens on state and federal social safety nets.
“Many workers across the country are not saving enough for a secure
retirement. This is not only a potential financial crisis for these
individuals and their families, but a critical economic issue for
the nation," said U.S. Secretary of Labor Thomas E. Perez. "Today's
guidance is another plank in the economic security platform that
President Obama and this administration have been building to help
create new savings options, ensure workers are getting sound
retirement advice, and bolster bedrock programs such as Social
Security.”
Years of inaction by Congress to address this growing problem have
led to state efforts to increase employee access to payroll
deduction retirement plans while minimizing employer
responsibilities and costs. Illinois has been leading the way with
the passage of the Secure Choice Savings Program which will provide
access to a retirement vehicle for nearly 1.2 million workers.
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Illinois, and states working to pass or implement similar programs, sought to
minimize the fiduciary responsibility of employers by ensuring that ERISA did
not apply to provisions outlined in state-run plans. Employers are not permitted
to contribute to employee accounts and are simply responsible for setting up the
payroll deduction and enrollment. Existing DOL guidance was unclear on whether
ERISA would preempt state laws but with the release of today’s proposed rule,
DOL has created clear parameters for states to implement laws while minimizing
the risk of ERISA preemption.
The Department’s proposed rule allows key features of Illinois’ program to be
implemented, including automatic enrollment with default deductions and default
funds, and makes clear that employers’ role in the process does not subject them
to ERISA or any fiduciary responsibilities.
[Office of Illinois State Treasurer
Michael Frerichs]
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