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Work and Save Sarah Mysiewicz Gill AARP Senior Legislative Representative

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Page 1: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Work and Save

Sarah Mysiewicz Gill

AARP Senior Legislative Representative

Page 2: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Half of Boomers & Gen Xers At Risk of Financially Insecure Retirement

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% a

t ri

sk

Early Boomers Late Boomers Gen Xers

EBRI 2003 RRR 51.7% 48.5% 51.7%

EBRI 2012 RRR 44.3% 43.3% 43.9%

Source: EBRI Retirement Readiness RatingTM: 2003 vs. 2012

Page 3: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

U.S. PRIVATE SECTOR WORKERS: Does your employer offer

a pension or retirement plan? By Personal Annual Income

Source: NCPERS, Analysis of Current Population Survey, March 2011 Supplement

Key Determinants: Income

Page 4: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Key Determinants: Ethnicity

Data source: NIRS analysis of CPS ASEC microdata from IPUMS. Universe is public and private wage and salary employees age 25-64. Racial categories are single-race

Page 5: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Key Determinants: Age

Source: ICI

Page 6: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

15x More Likely to Save if Employer

Offers Plan

Not covered by an Employer Plan -Deductible IRA Only

Covered by an Employer Plan

4.6%

71.5%

Participation Rates

Data compiled by AARP’s Public Policy Institute from unpublished estimates from the Employee Benefit Research Institute of the 2004 Survey of income and Program Participation Wave 7 Topical Module (2006 data). See also Brookings' Retirement Security Project and WhiteHouse.gov

Page 7: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Payroll Deduction Drastically

Increases Participation

Not at allimportant

Not tooimportant

Somewhatimportant

Very important

4% 5%

28%

62%

Source: EBRI 2011

Percentage of Respondents who say Payroll Deduction Is Important to Helping them Save

Page 8: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%
Page 9: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Senator: Do any of you see any reason why plans need to be run by State Governments? … How do consumers in Illinois benefit from having to go through the State of Illinois to invest? … I mean, why do we need to have the State Governments involved at all? Shouldn't you just be able to go online on Vanguard and open your own account and just pay Vanguard's fee and not a fee to the States? Proponent: If Illinois consumers went directly to buy the funds, they would pay higher fees overall than if we hadn't put this program together, we wouldn't have negotiated institutional share classes that were lower using the economies of scale. We are bringing a billion dollars to a vendor. Congressional Testimony

Laboratories of Democracy

Page 10: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Senator: Do any of you see any reason why college savings plans need to be run by State Governments? …How do consumers in Illinois benefit from having to go through the State of Illinois to invest in a college savings plan? … I mean, why do we need to have the State Governments involved in college savings programs at all? Shouldn't you just be able to go online on Vanguard and open your own college savings account and just pay Vanguard's fee and not a fee to the States? Proponent: If Illinois consumers went directly to buy all the funds that are part of Bright Start currently, they would pay higher fees overall than if we hadn't put this program together, we wouldn't have negotiated institutional share classes that were lower using the economies of scale. We are bringing a billion dollars to a vendor. 2004 Congressional Oversight Hearing on Section 529 Savings Plans

Laboratories of Democracy

Page 11: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Jo

529’s: A model for retirement?

Source: College Savings Plan Network

Page 12: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

529’s: A model for retirement?

Source: The College Savings Plan Network

Page 13: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

2012: Massachusetts passed plan for non-profits California passed feasibility study 2013: Oregon passed study of retirement security 2014: Minnesota and Connecticut each passed a feasibility study, appropriating

$400k for the work Over a dozen states working on this concept nationwide . States that

passed one chamber include: Washington and West Virginia. Additional states considering the concept include: Indiana, Nebraska, Wisconsin, Ohio, Colorado, and Arizona .

2015: Illinois Governor signs Secure Choice into law. Utah Senate and Virginia pass studies unanimously. AARP expects ~30+ states advocating on Work and Save

National Context

Page 14: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Jo

Work and Save: A National Movement

Page 15: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Jo

Work and Save: A National Movement

Page 16: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Jo

Work and Save: A National Movement

Page 17: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Small business owners overwhelmingly agree that retirement

benefits help recruit good employees

17 Data from NCPERS

Small Businesses Support Work and Save

Page 18: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

National Media Attention

Page 19: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Small Business Quotes Industry Support for Work and Save- Illinois Secure Choice/ Auto IRA

“Secure Choice opens up access to a secure and affordable employment-based retirement savings opportunity from which minority communities have been historically excluded. It will also help to create a culture of saving and financial literacy that will benefit financial services firms.” – Martin Cabrera, Jr., Cabrera Capital Markets

Supporters: TIAA- CREF Cabrera Capital Ariel Investments American Society of Pension Professionals and Actuaries Illinois Black Chamber of Commerce National Association of Women Business Owners AARP

Page 20: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Small Business Quotes Industry Supports Work and Save- Washington Senate Bill 5826/ Marketplace Model

Supporters: American Council of Life Insurers Securities Industry and Financial Markets Association AARP

“On behalf of the Securities Industry and Financial Market Association, representing securities firms, banking, and asset management- in strong support of the legislation in front of you … a long-term retirement plan is in the benefit of the country. This plan itself is a great option in our viewpoint… This state set the national path.” ~ Testimony provided by SIFMA representative February 11 on SB 5826

Page 21: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Industry Support for Work and Save- Maryland Task Force/ Secure Choice

“We are a strong advocate of a plan like this, and highly recommend an option that allows the private sector an opportunity to also manage and administer the program.” Gary Kleinschmidt, Member Task Force to Ensure Retirement Security for All Marylanders

Sample of Participants: Vice Chairman, T. Rowe Price Retirement Sales Manager, Legg Mason Global Asset Management Secretary, Maryland Department of Business and Economic Development Maryland State Treasurer Secretary-Treasurer, Maryland State and DC AFL-CIO Policy Director for Public Services, SEIU Members of House and Senate

Page 22: Work and Save - Kevin LemboSource: ICI . 15x More Likely to Save if Employer Offers Plan Not covered by an Employer Plan - Deductible IRA Only Covered by an Employer Plan 4.6% 71.5%

Questions?

Sarah Mysiewicz Gill Senior Legislative Representative

State Financial Security & Consumer Affairs AARP

202-434-3756 [email protected]

@pensionimposble

mailto:[email protected]

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