PHILADELPHIA (KYW Newsradio) — Philadelphia voters will be asked to create a Retirement Savings Board under a bill signed into law by Mayor Cherelle Parker last week.
The Retirement Savings Board would oversee a new plan for Philadelphians whose employers don’t offer pensions or 401(k) plans. Parker sees it as a way to reduce poverty among older residents, as 35% of the oldest Philadelphians live at or near the poverty line.
“We have a significant population that is aging into their golden years, and we want them to have economic security and self-sufficiency,” Parker said.
Workers would be automatically enrolled, if their employers choose to participate, with a contribution rate of 3-6% of their pre-tax earnings. The money would be put into an Individual Retirement Account (IRA) tied to the worker, not the employer, so workers could change jobs and keep saving. They could also opt out or change the contribution rate. Employers don’t have to match funds.
Bill Walsh of AARP said just making the deductions automatic makes it far more likely people will save.
“Philly Saves will create a clearer path to retirement, helping Philadelphia build financial stability and great confidence in their future,” Walsh said.
John Scott, of Pew Charitable Trusts, shared that sentiment.
“Savings, even small amounts, can have a big impact on people’s lives and on their communities. Just $10,000, for instance, saved over a career could cover medical bills or repair a roof so people can stay in their homes,” Scott said.
The referendum will be on the May 19 ballot.