S.4344-A (Savino) / A.4982-A (Rodriguez)




S.4344-A (Savino) / A.4982-A (Rodriguez)


To Create State Run Pension Plans for Private Sector Workers



The Business Council opposes S.4344-A (Savino) /A.4982-A (Rodriguez), a bill that would establish in the form of an automatic enrollment payroll deduction IRA, the New York State secure choice savings program for private sector employees.

There is growing concern in our nation about insufficient retirement savings, even though there are many retirement plans already available to employees outside the workplace.

Our concerns are several:

  • No employer member of The Business Council has asked for the creation of this type of program. Employers are already gearing up to deal with the state’s new paid family leave mandate, which will impose compliance burdens on business, including small business.
  • The bill as drafted raises a number of issues, including employer applicability (how/when does it apply to seasonal employers; to related business entities with common ownership), and legal status (questions have been raised regarding its compatibility with ERISA).
  • Its impact on increasing overall retirement savings level is unclear, as employees are allowed to opt out of participation.
  • Concerns have also been raised that, rather than enticing new and/or increased retirement savings, it could result in the shifting of participants from existing private retirement vehicles into this state-sponsored retirement program.
  • Separate and distinct from the New York state secure choice savings program fund that consists of the private retirement contributions of the enrollees, the bill also requires the establishment of the New York state secure choice administrative fund – its function is to pay – using state dollars - for expenses incurred including start-up costs. This is a significant burden on all taxpayers of the State of New York. Several states have enacted laws but not yet effectuated them, partly due to the costs involved. For example, The State of Illinois State Treasurer fiscal note for the establishment of the secure choice program estimates between $15 million and $20 million will be necessary to implement and operate the program for the expenses incurred by the employees, consultants, lawyers, actuaries, office space and other expenses necessary…to implement the program. (Dan Rutherford, Treasurer, State of Illinois, May 27, 2014).

At minimum, we believe these and other significant issues including the compliance and start-up costs to the state in developing and administering such a program and whether such a program will address the problem of employees signing up for retirement plans, need to be considered.

It is equally important to note that where savings plans are available, employees are not taking advantage of current market place products – including the new federally administered retirement savings plan- myRA program established by the U.S. Department of Treasury (www.myra.gov) that offers access for individuals that do not have an employer-sponsored plan.

In addition, several states have also enacted legislation known as the “Marketplace” which focuses on private providers and myRA and establishes a web-portal structure to connect private sector employers with qualifying plan vendors. Washington and New Jersey have taken this approach.

For the reasons stated above, The Business Council recommends against approval of S.4344-A (Savino) / A.4982-A (Rodriguez) at this time.