Illinois Secure Choice Savings Program
The Illinois Secure Choice Savings Program, signed into law January 2015, will help small businesses that struggle to offer retirement benefits to their employees and provide retirement security to the 2.5 million Illinoisans who do not have access to an employment-based retirement plan. Below is an overview of what small businesses need to know about the program.
What is the Illinois Secure Choice Savings Program?
- The Illinois Secure Choice Savings Program will automatically enroll employees into a retirement savings program. Employees may opt out at any time.
- Once enrolled, workers will contribute a portion of their income (default rate = 3%) into an investment fund managed by a private company and overseen by the Illinois Secure Choice Savings Board.
- Workers are allowed to opt out or change their investment contributions, and the fund is entirely employee-funded.
- Illinois began a pilot program in 2018 and more information on implementation will come in 2019.
How will the law impact employers?
- Employers will not contribute to funds, manage funds or have any responsibility for financial advice. Employers must give employees the option to opt out of the program and use their existing payroll system to send employees’ contributions to the fund each month.
- Small business owners support the Secure Choice Savings Program. Small Business Majority’s scientific polling found the majority of Illinois small business owners supported legislation establishing the Secure Choice Savings Program.
- Many small businesses would like to offer retirement plans to their employees—to help attract a talented workforce and boost employee morale—but can’t afford the overhead and administrative costs. The Secure Choice Savings Program provides a way for small businesses to offer their employees access to retirement benefits without incurring the associated burdens of employer- sponsored retirement programs.
- Nearly 80% of those who work for small businesses do not have access to a retirement savings option at work; meanwhile, the small business market is not being adequately served by the financial services industry. The Secure Choice Program will help serve an underserved population that wants to save for retirement.
What businesses qualify for the program?
- The program does not apply to businesses that meet at least one of the following criteria:
- Have fewer than 25 employees;
- Are less than two years old;
- Already offer retirement plans.
- Small businesses with fewer than 25 employees and the self-employed may opt in and enroll in the Secure Choice Savings program. Once enrolled, they can manage the payroll deduction that best fits their financial needs.