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For American Workers, 4 Key Retirement Issues to Watch in 2019
John Chiang, the California state treasurer, spoke at a news conference Wednesday at Loyola Law School in Los Angeles. “The goal is to make sure we stem the tide of the retirement crisis and help Californians realize the dream of a golden retirement,” he said in an interview.Monica Almeida for The New York Times
It’s going to be a busy year in Washington and state capitals for policymakers working to improve the retirement security of millions of Americans.
New retirement savings options will be on the horizon in 2019 for millions who don’t have access to workplace 401(k) plans. Meanwhile, Congress will try to agree on a plan to avert sharp cuts in traditional pension benefits for over a million workers. The long-running battle over regulation to protect investors will enter a new phase when the Securities and Exchange Commission issues new “best interest” rules governing investment advice. And the House of Representatives could take up legislation to expand Social Security.
Here is a look at crucial retirement policy topics to watch in the year ahead.
Savings Plans
Workplace retirement savings plans have proved to be the most effective route to help savers, mainly thanks to features like automatic enrollment, regular payroll deductions and matching employer contributions. Yet one-third of private sector workers had no access to an employer-sponsored retirement plan in 2016, according to the Government Accountability Office. The coverage shortfall is greatest among low-income workers and people working for small companies.
But 2019 will be a turning point in covering more workers.
Some states are starting programs that automatically sign up workers who don’t have workplace 401(k) accounts or Individual Retirement Accounts. Over time, employers in many of these states will be required to set up automatic payroll deductions for these accounts and enroll workers, although they will not need to make matching contributions.
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Oregon started its plan this year; California and Illinois will start in 2019; Vermont, Maryland and Connecticut are preparing programs; and New York has passed legislation and is establishing a board to oversee the start of a state program over the next two years. And this week, New Jersey’s General Assembly passed legislation authorizing the creation of a program (the state’s Senate is expected to consider the bill early next year).
The states that have approved plans could eventually extend coverage to 15 million workers, AARP estimates.
California’s plan alone could cover 7.5 million workers, officials there say. The CalSavers program is in a pilot phase through the end of June, and will be open to all employers beginning July 1; mandatory compliance will phase in with three waves based on employer size.
“The goal is to make sure we stem the tide of the retirement crisis and help Californians realize the dream of a golden retirement,” says John Chiang, the state treasurer. “It’s not an easy task, because the current marketplace has failed.”
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