Gallagher celebrates House passage of Keystone Saves
Rep. Pat Gallagher June 12, 2023 | 4:04 PM
HARRISBURG, June 12 – State Rep. Pat Gallagher, D-Phila., today celebrated the passage of his legislation that would establish Keystone Saves, a voluntary employee retirement savings program that would expand access to private sector individual retirement accounts (IRA) to the over two million Pennsylvania workers who currently have no opportunity to save for retirement at their place of employment.
“Unfortunately, more and more Pennsylvanians are reaching retirement age without enough savings to age gracefully after a lifetime of hard work,” Gallagher said. “We’re working in a bipartisan manner to ensure that everyone has the opportunity to save for retirement. With many employees lacking employee sponsored retirement plans, there have to be more options for retirement. This is one more step to giving Pennsylvanians more independence and preparing them for life on a fixed income.”
The State Treasurer’s Retirement Security Task Force Report highlighted the vast number of Pennsylvanians who are unprepared for the financial challenges of retirement. It’s a problem not just for retirees but also for the commonwealth as financially unprepared retirees are projected to cost the state an additional $14 billion in social services between 2015 and 2030, an average of nearly $1 billion per year. Additionally, lower consumer spending by retirees over this same time is estimated to cost the state roughly $1.4 billion in reduced tax collections, putting additional pressures on the state’s finances.
National data shows that workers who have access to an employer sponsored retirement plan are 15 times more likely to save than employees who lack access to a plan through their employer. In Pennsylvania, 78% of employees with access to a retirement plan at their workplace take advantage of the opportunity to save. Keystone Saves would allow employees to contribute to an IRA through an automatic payroll deduction, giving those without an employer retirement plan the opportunity to save for their retirement like the nearly 3.1 million employees with access to an employer plan can do.
Gallagher said Keystone Saves is designed to maximize employee choice and control while minimizing any burden on employers. Employees can set their own contribution levels, increase or decrease their deductions, make investment choices, leave the program at any time, or even opt out altogether. Retirement accounts can provide employees with emergency savings. Accounts are also portable so employees can continue to save if they change jobs, wish to rollover their Keystone Saves account into another retirement plan, or even move their account to a private account manager.
For employers competing to attract and retain employees, Keystone Saves would provide a frictionless system that enables participation at no financial cost and little additional time, and extends protection from any legal liabilities, Gallagher said. The vast bulk of employee, account, and investment administration and management activities, however, will be borne by the state Treasury Department working with a private sector, third-party administrator and investment managers similar to the 529 College and Career Savings Program. Keystone Saves also includes a four-year phase-in period, a commonsense approach which allows businesses to plan ahead.
For more information, those interested can contact Gallagher’s district office at 215-281-3414.
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