Secure doesn’t mean “secure,” at least in Illinois.
The governor of the fiscally-plagued state, Bruce Rauner, issued an amendatory veto that could make employer participation in Illinois’ government-sponsored retirement program, Secure Choice, optional.
The legislation currently makes participation in Secure Choice mandatory for employers that do not offer their workers a 401k, IRA or similar retirement plan.
According to the program, as written, businesses are required to automatically withhold 5 percent of an employee’s compensation, unless the employee elects a different amount or opts out entirely.
The program is set to launch in November, but the Governor’s veto last week makes the program optional, rather than mandatory. It’s as yet unclear if the legislature has the votes to override the veto.
Labor law firm Jackson Lewis P.C. reports that the Governor voiced concerns in his veto message, among them:
- Fewer small employers will sponsor retirement plans;
- Small employers may terminate their existing company-sponsored plans;
- Federal guidance has changed regarding the relationship of programs like Secure Choice with the Employee Retirement Income Security Act of 1974 (ERISA); and
- The program has a history of delays and poor implementation.
Opposition members pounced on Rauner’s actions, with Democratic State Treasurer Mike Frerichs saying, “the states chief executive is playing political games with retirement savings for 1.2 million private-sector workers.”
Rauner changed the wording from saying employers “shall” offer Secure Choice to “may” offer secure choice, giving employers the right to deny the retirement savings plan.
“This should have been a no-brainer,” Frerichs told Illinois NBC affiliate WAND. “The governor has tried to take away retirement protections from state employees but apparently he’s not satisfied with just that. He also wants to take away retirement security from private sector employees as well.”
The legislature is expected to take up an override of the veto this fall.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
