The program is meant to cover private-sector employees who lack access to a 401k or IRA-style defined contribution plans.
In 2014, Illinois lawmakers passed a law requiring employers in business for at least two years with at least 25 employees to either offer their own retirement plan to workers or participate in Secure Choice.
Unless an employee opts out, Secure Choice will automatically deduct contributions from employees’ paychecks and invest these savings in a Roth IRA account. The program will be launched in phases in 2018 and 2019 based on the size of a company’s workforce.
The retirement savings accounts will be connected to the associated employee, not the employer, and enjoy portability features of their employer-sponsored counterparts.
Currently, half of Illinois’ private-sector employees do not have access to an employer-sponsored retirement plan. When Secure Choice has been fully implemented, the state estimates 1.2 million workers will have retirement plan access directly through Secure Choice or because an employer chose to initiate its own retirement plan.
“Secure Choice will provide state residents who haven’t had the opportunity to plan for retirement with a smart way to do so,” Bob Guillocheau, president and chief executive officer of Ascensus, said in a statement. “We’re honored to partner with the state of Illinois as they strive to make it simple and affordable for employers to help employees save for retirement.”
Having previously worked with state governments on the 529 college planning portion of its business—and having the infrastructure in place—the company is now in a prime position to capitalize on the trend toward state-sponsored 401ks.
Congress and President Trump recently repealed Obama-era initiatives to cover workers at the state level. However, some states, including California, Oregon, and Illinois, have pledged to forge ahead with their plans.