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In Pennsylvania, a new retirement savings plan would help a wide range of workers

Saving for retirement can be difficult and complex. It’s even harder for the more than 2 million Pennsylvanians who don’t have access to retirement plans through their employers. This makes saving difficult even for the most disciplined. Yet failing to save for retirement has a broader effect on society, costing Pennsylvania taxpayers $14.3 billion in social spending over 15 years and robbing the state of $1.4 billion in tax revenues.

When workers have the opportunity to participate in workplace savings programs, they are 15 times more likely to save for retirement than when they save themselves in the open market. That’s why a large bipartisan group of Pennsylvania lawmakers, backed by state treasurer Stacy Garrity, is sponsoring the Keystone Saves Act, which would create an individual retirement account automatic savings vehicle for corporate employees in five or more people.

To help raise awareness of the bill, John Scott of The Pew Charitable Trusts joined Garrity and AARP Senior Legislative Retirement Savings Representative Jessica Eckman at a panel discussion on the PCN-TV cable news program Focus on Aging Adults in April. Scott runs the Pew Retirement Savings Project; AARP and PCN are the show’s sponsors.

Pennsylvania Cable Network’s Focus on Aging Adults: Retirement Savings Program

The panel highlighted the challenges workers face when trying to save for retirement and the barriers small businesses face in providing savings options to their employees. Experts have pointed out how difficult it is for workers in certain jobs, such as hairdressers and barbers, truck drivers and mechanics, waiters and bartenders, to save on their own. Panelists also discussed the challenges small businesses face in attracting talent with larger employers, who have low- or no-cost savings options.

Keystone Saves would operate similarly to established savings programs in Pennsylvania, such as the state’s highly successful 529 College and Career Savings Program. Businesses support Keystone Saves as a way to support their workforce. Additionally, Keystone Saves would require employers to provide only a census of workers and process a deduction chosen by the employee. Workers can save as little or as much as they can afford. The program is voluntary and employees can leave the program at any time if they wish. They can also withdraw money without penalty in an emergency while continuing their payroll deductions to replenish their savings.

The show concluded by noting that saving for retirement is a national struggle for millions of Americans, but automatic savings programs in other states such as Oregon, Illinois and California have proven effective. Keystone Saves would bring Pennsylvania in line with other states supporting their businesses, employees, and taxpayers with this common sense, free, flexible, and portable tool.

Desiree Hung works on The Pew Charitable Trusts Retirement Savings Project.