S.6045-D (Savino)/A.8332-F (Rodriguez)

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The Business Council opposes S.6045-D (Savino) /A.8332-F (Rodriguez), a bill that would create a state-administered retirement savings program for private sector employees, and mandate participation by all employers (whether for-profit or non-profit) of 25 or more that have been “in business” for at least two years and that had not offered a “qualified retirement plan” to their employees over the past two years.

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 with another employer mandate. 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.
• The bill contains no resources for start-up costs, and in fact, provides that if “adequate funds to implement the program [are not available] . . . the board may delay the implementation of the program.”

At minimum, we believe these and other significant issues need further consideration.

We note that Governor Cuomo is naming a NY SMART Commission (“Saving More to Achieve Richer Tomorrows”) to study available options for the creation of a government retirement plan for private sector employees that currently do not have employer sponsored retirement plans. The commission will be comprised of experts from the financial services industry, consumer advocates, public officials and state regulators. This is a pragmatic approach – to consider the many issues including the compliance and start-up costs to the state in developing ad administering such a program, the impact on small business and also whether such a program will address the problem of employees signing up for retirement plans.

It is equally important that the commission study why, when savings plans are available, that 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.

For the reasons stated above, The Business Council recommends against approval of S.6045-D (Savino) /A.8332-F (Rodriquez) at this time.