State Treasurer Joe Torsella was at the Dining Car last Friday listening to Rep. Mike Driscoll and others promote the Keystone Saves Program.
Driscoll (D-173rd dist.) and Rep. Mike Peifer, a Pike County Republican, are introducing the measure in the House. Peifer is chairman of the Finance Committee, which will consider the bill first.
Democratic Sen. Art Haywood, who represents parts of Northwest Philadelphia and eastern Montgomery County, was also at the Dining Car. He and Sen. Pat Browne, a Lehigh County Republican, are introducing Senate Bill 862 and are happy that Senate Majority Whip John Gordner has expressed support.
The program would expand private retirement savings plans to the 2.1 million Pennsylvanians who do not have access through an employer-sponsored retirement package.
A treasurer’s office task force projected that financially unprepared retirees will cost the state an additional $14.3 billion in social services from 2015-30. Reduced consumer spending by this group will depress tax collections by about $1.4 billion.
“The people who can’t afford to retire are going to be subsidized by some government program,” Driscoll said.
The proposal seems to have widespread support, including from the conservative Heritage Foundation and the liberal Brookings Institution.
“This has bipartisan support,” said Torsella, a Democrat.
Add the AARP and the Pennsylvania Chamber of Business and Industry to the list of supporters, according to Torsella.
“Gene Barr likes it? Wow,” Driscoll said of the Chamber president and CEO.
The program would allow employees to have a portion of their pay automatically deposited into an account overseen by the treasurer’s office. Private financial planners would seek to have the maximum return with minimum risk for enrollees. There is no employer contribution, and enrollees can feel comfortable that the state has no access to the account.
“It’s their money,” Haywood said.
Supporters say preliminary findings from states such as Maryland show the program can work, since studies indicate only 1 in 20 workers would open a retirement account on their own.
“Once people start saving, they’re going to do more saving,” Torsella said.
Driscoll said employers have to simply set up a payroll deduction plan, with employees setting aside a minimum of 3 percent of their pay.
“This is all employee driven,” he said.
Dining Car owner Nancy Morozin, a board member of the Greater Northeast Philadelphia Chamber of Commerce, sat in on the discussion and liked what she heard.
“I think this is going to be a home run,” she said.
Morozin asked Torsella about rollovers when an employee leaves.
“That’s our problem, not yours,” he said. “It goes with the person, not the employer.”
Torsella reasons that the accounts will enable people to hold off dipping into Social Security for at least a little bit of time, allowing their monthly Social Security benefits to grow.
The lawmakers cite statistics that one in three retirees have no savings, and others have little in their retirement accounts.
“You can’t retire on $5,000,” Haywood said.
Proponents of the plan see support in the legislature, with Gov. Tom Wolf ready to sign a final version.
“I feel like we’re on the cusp,” Torsella said.
“We think it will move quickly,” Driscoll said. “We’ve already talked to the governor. The governor loves it.” ••