Comptroller Scott Stringer Pushes City-Sponsored Retirement Plan
In New York City, three-fifths of private-sector employees don’t have employer-based retirement plans. At companies with fewer than 10 employees, that figure jumps to nearly 90 percent. In response to this problem, NYC Comptroller Scott Stringer recently released the "NYC Nest Egg Plan" to address what he says could be a burden for future taxpayers, who would be called upon to support a growing population of low-income seniors.
“Unless we act now, what should be the golden years in America’s largest City may well become the darkest years for too many people", Stringer said in a statement announcing the plan.
It is estimated that by 2040, New York City’s 65-and-older population will have grown by 1.4 million, or 40.7 percent, since 2010.
For those employers who already provide a retirement plan, the NYC Nest Egg proposal requires no action. But for those who don’t, the plan provides a multi-pronged approach:
The NYC Nest Egg plan would be overseen by an independent board of experts whose responsibility would be to protect the best interests of participants. The board would be screen private plans for listing in the NYC 401(k) Marketplace, as well as periodically conduct competitive bidding to select asset management firms to manage retirement savings under the new Empire City 401(k) plan.
The criteria the board will use to select marketplace plans asset managers for the Empire City 401(k) are not yet finalized. The comptroller’s office says their goal is to limit investment options only to low-cost index funds or target-date funds, which allow future retirees to choose a future retirement date and then have their retirement savings invested appropriately to maximize returns early but minimize risk as the retirement date approaches.
The comptroller’s office could not say at this point whether approved plans or asset managers would be required to show they are not causing the displacement of NYC residents and small businesses.
To design the NYC Nest Egg Plan, the comptroller worked over the past 19 months with a nine-member study group, featuring academics from a wide ideological spectrum from Harvard, Stanford, Columbia, Boston College and The New School for Social Research.
The study group also authored a separate analysis of options to increase the retirement security of NYC workers. The group had some differences of opinion regarding the best set of options, some including a mandate, some including only public or only private plan options. A majority supported the three-pronged approach taken by the NYC Nest Egg Plan.
While exact details for broader engagement are not yet available, now that the NYC Nest Egg Plan is public, the comptroller’s office says there will be ample opportunity for everyone to have input on the plan through "a very public process".
You can find the full text of this report on Comptroller's website:
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