Williams recently announced that a project to further enhance the Transco natural gas pipeline system will generate approximately $100 million in economic impact to the regional and state economy of Pennsylvania, according to a study authored by researchers at Philadelphia-based Econsult Solutions, Inc.
The Leidy South project includes the proposed installation of new turbine-driven compressor units in Luzerne County, Pa., (Compressor Station 607) and Schuylkill County, Pa, (Compressor Station 620). A turbine driven compressor unit and cooling will be added to Compressor Station 610 that was built in Columbia County as part of the Atlantic Sunrise project.
According to the researchers, the design and construction of two new compressor facilities associated with the proposed Leidy South project could support approximately 680 direct, indirect and induced jobs in Pennsylvania – primarily in Luzerne and Schuylkill counties – with a combined $28 million in employee compensation.
The economic modeling exercise was funded by Williams and uses IMPLAN, a widely used commercial software designed to perform input-output economic analysis in order to estimate the economic and employment impact on each of the counties where construction is expected to occur. IMPLAN is used by state governments across the nation for economic modeling and predicting.
“This report shows how natural gas infrastructure projects like Leidy South can provide a significant boost to our local economy,” said Columbia Montour Chamber of Commerce President Fred Gaffney. “Williams has a long history of operations in Pennsylvania and we are pleased to see the company continuing to invest in our region.”
From ChamberChoice
Note: This is Part 1 of an article on medical loss ratios (MLR). Part 2 will be posted next week.
As a reminder, insurance carriers are required to satisfy certain medical loss ratio (“MLR”) thresholds. This generally means that for every dollar of premium a carrier collects with respect to a major medical plan, it should spend 85 cents in the large group market (80 cents in the small group market) on medical care and activities to improve health care quality. If these thresholds are not satisfied, rebates are available to employers in the form of a premium credit or check.
If a rebate is available, carriers were required to distribute MLR checks to employers by September 30, 2019.
Importantly, employers must distribute any amounts attributed to employee contributions to employees and handle the tax consequences (if any).
This does not apply to self-funded plans.
The rules around rebates are complex and require careful review with ERISA counsel. Among other things, an employer receiving a rebate as a policy holder will need to determine:
• who receives a rebate (e.g., current participants v. former participants);
• the form of the rebate (e.g., premium reduction v. cash distribution);
• the tax impacts of any such rebate (on both the employer and participants receiving the rebate); and
• what, if any, communication to provide participants regarding the rebate.
The following questions and answers summarize information regarding what employer action may be necessary.
What Will the Rebate Amount Be?
Carriers determine MLR on a state basis by market segment (individual, small group, or large group). Carriers do not disaggregate by type of plan within these markets (e.g., PPO v. HMO v. HDHP) or by policyholder so the carrier will have to let you know the amount.
A carrier is not required to provide a rebate to an enrollee if the total rebate owed is less than $20 per subscriber ($5.00 when a carrier pays the rebate directly to each subscriber). This rule regarding de minimis amounts only applies to the carrier, not to employers refunding amounts to participants.
Will there be any Communication?
Yes.
For each MLR reporting year, at the time any rebate of premium is provided, a carrier must provide the policyholder and each current enrollee who was also enrolled in the MLR reporting year in a form prescribed by HHS.
Employers do not have to notify employees, but they may want to address the notices being distributed by the carriers. Language similar to the following provides a starting point for such a notice:
Employees should have received a notice of rebate from [carrier]. In short, [Employer] received a rebate check in the amount of $_____. Amounts attributable to participant contributions will be used to [reduce premium amounts] for [currently enrolled employees] in accordance with legal requirements. These amounts will be reflected in the [October ___] paychecks.
What will the Form of Rebate to the Employer Be?
Carriers may issue rebates in the form of either a premium credit (i.e., reduction in a premium owed), a lump-sum payment, a lump-sum reimbursement to the account used to pay the premium if an enrollee paid the premium using a credit card or direct debit, or a “premium holiday,” if this is permissible under state law.
When will Rebates be Issued?
Rebates must be paid by September 30 each year. A carrier that fails to timely pay any rebate must additionally pay the enrollee interest at the current Federal Reserve Board lending rate or 10% annually, whichever is higher, on the total amount of the rebate, accruing from the date payment was due.
Do Employers Have to Give Some or All of the Rebate to Participants?
Yes, unless they paid 100% for all tiers of coverage.
Carriers will generally send rebate checks to employers and employers must mete out any amounts attributed to employee contributions to employees and handle the tax consequences. There is no one formula for employers to use, but guidance has been provided to aid employers.
ERISA-covered group health plans
To the extent that rebates are attributable to participant contributions, they constitute plan assets. Plan assets must be handled in accordance with the fiduciary responsibility provisions of Title I of ERISA.
If the employer is the policyholder, determining the plan’s portion, if any, may depend on provisions in the plan or the policy or on the manner in which the plan sponsor and the plan participants have shared in the cost of the policy. If the plan or its trust is the policyholder, in the absence of specific plan or policy language to the contrary, the entire rebate would constitute plan assets, and the policyholder would be required to comply with ERISA’s fiduciary provisions in the handling of rebates that it receives.
The HHS regulations and related DOL guidance for ERISA plans leave to the policyholder the decision as to how to use the portion of a rebate that constitutes plan assets, subject to ERISA’s general standards of fiduciary conduct. The DOL notes that, in choosing an allocation method, “the plan fiduciary may properly weigh the costs to the plan and the ultimate plan benefit as well as the competing interests of participants or classes of participants provided such method is reasonable, fair and objective.” An allocation does not necessarily have to exactly reflect the premium activity of policy subscribers. A plan fiduciary may instead weigh the costs to the plan and the competing interests of participants or classes of participants when fashioning an allocation method, provided the method ultimately proves reasonable, fair, and objective. If the fiduciary finds that the cost of passing through the rebate to former participants would exhaust most of those rebates, the proceeds can likely be allocated to current participants.
Guidance does not address how to handle an MLR rebate where the amount is inconsequential (e.g., a dollar per participant). Taking a cue from DOL Field Assistance Bulletin No. 2006-01, a fiduciary may be able to conclude, after analyzing the relative costs, that no allocation is necessary, when the administrative costs of making correction far exceed the amount of the allocation.
If a plan provides benefits under multiple policies, the fiduciary is instructed to allocate or apply the plan’s portion of a rebate for the benefit of participants and beneficiaries who are covered by the policy to which the rebate relates provided doing so would be prudent and solely in the interests of the plan according to the above analysis. But, according to the DOL, “the use of a rebate generated by one plan to benefit the participants of another plan would be a breach of the duty of loyalty to a plan’s participants.”
Plans that are neither covered by ERISA nor are governmental plans (e.g., church plans)
With respect to policyholders that have a group health plan but not a governmental plan or a plan subject to ERISA, carriers must obtain written assurance from the policyholder that rebates will be used for the benefit of current subscribers or otherwise must pay the rebates directly to subscribers.
The final rule issued on February 27, 2015 provides that subscribers of non-federal governmental or other group health plans not subject to ERISA must receive the benefit of MLR rebates within three (3) months of receipt of the rebate by their group policyholder, just as subscribers of group health plans subject to ERISA do.
From PA DEP
Grant funding for energy efficiency and pollution prevention projects for small business owners and farmers is still available from the Pennsylvania Department of Environmental Protection (DEP) through the Small Business Advantage Grant program.
“This grant program was created with small businesses and farmers in mind. There are tremendous monetary savings available to Pennsylvania’s small business entrepreneurs by installing energy-efficient equipment, such as LED lighting, and Energy Star rated HVAC and boilers,” said Secretary Patrick McDonnell. “Pennsylvania farmers can also benefit from these grants by receiving support for undertaking projects to help them divert sediment and nutrient runoff from our waterways.”
Pennsylvania farmers and other small business owners with 100 or fewer full-time employees are eligible for the grants. Projects must save the business a minimum of $500 and 25 percent annually in energy consumption, or pollution-related expenses. Natural resource protection projects are exempt from the minimums; however, the projects must be able to quantify sediment and nutrient reductions into nearby waterways.
“Clean water and healthy soil are the keys to sustaining our farms and feeding our communities,” Agriculture Secretary Russell Redding said. “These grants are an investment in our future, and I encourage Pennsylvania farmers to take advantage of this opportunity.”
Businesses can apply for 50 percent matching funds for equipment or materials, up to $7,000, when adopting energy-efficient or pollution prevention equipment or processes. Applications are considered on a first-come, first-served basis, and will be accepted until fiscal year 2019-20 funds are exhausted, or April 12, 2020, whichever occurs first.
The complete grant application package, which includes step-by-step instructions for completing the online application as well as all related forms, is available by visiting the DEP Small Business Ombudsman’s Office site.
To contact the Small Business Ombudsman’s Office, call 717-772-5160 or email.
From PA Chamber of Business & Industry
For the past 29 years, the PA Chamber has commissioned a statewide survey of employers to gage their thoughts on the economy, the direction the state is headed and to also learn more about what issues are impacting them the most. The survey helps us to keep our pulse on the concerns and needs of the state’s broad-based business community so that we can better advocate on their behalf in the halls of the state Capitol. This year’s Economic Survey – which was conducted in August 2019 by Susquehanna Polling and Research and was completed in partnership with The Initiative for Family Business and Entrepreneurship at Saint Joseph’s University – found that employers are feeling confident and positive about the state of the economy, with many expecting to increase sales and grow their business over the coming months. Yet, despite this positive news, there remains a very real concern among the Commonwealth’s job creators with the status of the state’s workforce; with employers overwhelming stating that the jobs skills gap was the biggest challenge facing their business.
According to the survey of 650 employers, job creators listed difficulties finding skilled and qualified employees to fill open positions as the biggest problems facing their companies. This represents the second year in a row that workforce has been employers “top of mind” issue. Only a combined 43 percent rated the quality of the state’s workforce as either “excellent” or “good” – the second lowest ranking on record – with 20 percent rating it as “poor,” – a new high in this category.
It was based on the feedback from its members that the PA Chamber launched its aggressive workforce initiative in 2016 – Start the Conversation Here – designed to help address the skills gap that continues to plague businesses throughout the state. As I’ve previously noted in this column, the workforce issue is one that stretches across all industry sectors in every region of the state. It’s one that many of our local chamber partners have said they are dealing with in their communities. And it’s one that we’re proud to be working with a broad coalition of organizations, local chambers and lawmakers to address.
Employers also once again cited concerns with the state’s tax structure. Nearly 55 percent of respondents listed lowering business taxes as one of the top issues they want legislators to focus on in Harrisburg. That’s why the PA Chamber is urging state elected officials to follow the lead of the federal government and make much needed changes on the state level. To that end, we are advocating for a reduction in the state’s Corporate Net Income Tax – which remains one of the highest in the nation – as well as for reforms to that would streamline and simplify the state’s Tax Code and regulatory environment.
In other news, October has been designated as “Local Chamber of Commerce Month” by Gov. Tom Wolf. The governor’s greeting highlights the important role local chambers play in communities throughout the state. Our local chamber partners have been invaluable in our collective efforts to promote a pro-growth agenda in the state Capitol. We look forward to building on these strong relationships to continue to advocate for policies that will improve our business climate and promote economic growth!
- The Children’s Museum, The Exchange, the Bloomsburg Area YMCA, AGAPE and Bloomsburg Theatre Ensemble will team up to hold Boo!burg, a free Halloween event, at the Children’ Museum, this Friday, Oct. 25, from 5:30-8:30 p.m. Enjoy Trunk-or-Treat, children’s crafts and games, marshmallow roasting, a costume contest, watch a great pumpkin drop and more.
- There will be a fun, Halloween-themed, family-friendly fundraising event this Saturday, Oct. 26, at Hawkins Chevrolet, located at 1856 Montour Blvd. (Rt. 11), Danville, to benefit the Montour Area Recreation Commission, which manages the Montour Preserve.
This event is being hosted by the Danville Business Alliance and several other Danville-based organizations. It will feature an obstacle course, pumpkin toss, trunk or treat and much more. All proceeds raised from the event will benefit MARC, which currently does not have enough funding to sustain operations beyond next fall. For additional information, visit the Facebook event page, and view the below video.
- Hand in Hand Family Resource Center will present a special Halloween edition of C.A.M.P.S. (Construction, Art, Music, Play, Sensory), called Tricks & Treats this Sunday, Oct. 27, from 2-5 p.m. at Arnold’s Golf Course in Mifflinville.
The event will begin with a Halloween golf cart parade (with golf card decorated by local families), and then will move onto the C.A.M.P.S. program, which will include: building haunted houses from recycled materials, skeleton handprints, apple, pumpkin and potato stamping, blowing ghost paintings, making musical instruments, eyeball putting, pumpkin bowling, and more. This free event (which includes a suggested but not mandatory donation to benefit Hand in Hand), is for all ages and every ability. For more information, visit the Facebook event.
- LIFE Geisinger will hold its annual Open House on Tuesday, Nov. 12, from 3-6 p.m., at its location at 1100 Spruce St., Kulpmont. There will be light refreshments, door prizes and tours of the facility. LIFE Geisinger is a unique and innovative program for older adults designed to give them the support they need and continue living at home, and attendees will be able to learn more about the program, eligibility guidelines and see if it could be an option for them or a loved one. See the flyer for additional details and to RSVP.
Two meetings scheduled for the evening of Thursday, Nov. 7 in Bloomsburg have a focus on strengthening communities in Columbia and Montour Counties. The first is being hosted by the Town of Bloomsburg to allow new administrative staff in several departments to introduce themselves, discuss concerns, and answer questions. Later that evening, a professional engineer and land use planner will talk about “The Foolproof Town: Identifying Productive Places.” Business and community leaders as well as interested citizens are invited to attend both events.
The meeting being hosted by the Town will begin at 5:00 p.m. at the Bloomsburg Fire Hall, 911 Market Street. In addition to the Town Manager, representatives of the Code Enforcement office and Police Department are scheduled to participate.
The Exchange and DRIVE are then co-hosting Charles Marohn of StrongTowns.org from 6:30-8:30 p.m. at The Greenly Center on Main Street. Charles L. “Chuck” Marohn, Jr., is the founder and president of Strong Towns and the author of Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity. He is a professional engineer licensed in the state of Minnesota and a land-use planner with two decades of experience; he holds a bachelor’s degree in civil engineering and a master’s of urban and regional planning, both from the University of Minnesota. Marohn hosts the Strong Towns Podcast and has presented Strong Towns concepts in hundreds of cities and towns across North America. He is featured in the documentary film Owned: A Tale of Two Americas and was named one of the Ten Most Influential Urbanists of all time by Planetizen.
Downtown Danville
Among the questions that Strong Towns raises: What development do we want? What do we not want? What does “development” even mean? And how do we ensure wealth creation that benefits all of our fellow citizens? This event aims to energize the region-wide discussion to encourage people from throughout Columbia and Montour counties to work together to find answers for each of our places and for our region as a whole.
Other sponsors include Downtown Bloomsburg, Inc.; the Danville Business Alliance; the Central Susquehanna Community Foundation; the Columbia-Montour Visitors Bureau; the United Way of Columbia and Montour Counties; and Community Strategies Group.
Light refreshments will be available at The Greenly Center.
RSVP for the event at The Greenly Center to Oren B. Helbok at The Exchange at 570-317-2596 or email. There is no need to RSVP for the meeting at the Fire Hall. Both events are free to attend.
More than 400 businesses and organizations belong to the Chamber to receive benefits and support efforts to strengthen their businesses and our region. Increased membership allows us to offer additional programs and benefits, have a stronger voice in advocacy and be involved in more activities and initiatives in our communities. The Chamber welcomes its newest member, Philadelphia Federal Credit Union, to help us fulfill our mission.
Previously a longtime member that the Chamber is excited to welcome back after a short absence, Philadelphia Federal Credit Union was founded in 1951 and currently has more than 116,000 members and manages assets in excess of $1 billion. PFCU offers a variety of personal, business and insurance products, and also provides numerous education opportunities and services for both its members and the general public. PFCU has 11 branch locations – 10 of which are in Philadelphia, where its headquarters are located, and the other of which is in Bloomsburg at 1615 Columbia Blvd. (Rt. 11), which it moved into just over two years ago from its previous longtime location next to Renco Ace Hardware further up Rt. 11. The Bloomsburg branch can be reached at 570-784-5200, or visit its website for more information.
From IMC
The Innovative Manufacturers’ Center (IMC) is proud to announce the launch of the inaugural “What’s So Cool About Manufacturing?” Central Susquehanna student video contest for the 2019-2020 school year.
The “What’s So Cool About Manufacturing?” (WSCM) student video contest pairs student-teams with local manufacturers, providing middle school students a unique opportunity to learn what makes modern manufacturing cool and produce, shoot and edit a video that documents their experience. The program was created to generate excitement that draws students to consider manufacturing career paths.
“We are really excited to pilot this program in our school districts this year, and help it expand across the state” said Dan Manetta, Executive Director/CEO IMC. “STEM education is vitally important and our students will get a great opportunity see how cool our local manufacturers really are, and share their videos with the community.”
“What’s So Cool About Manufacturing?” Central Susquehanna Region, produced by the Innovative Manufacturers’ Center, the Central Susquehanna Intermediate Unit and The Foundation of the Columbia Montour Chamber of Commerce, will join 16 other regions across Pennsylvania this year, and students from seven schools will partner with seven manufacturers in Columbia, Northumberland, Snyder, Union and Montour counties. Among these manufacturers are Chamber members CSS Industries, SEKISUI SPI, Commercial Stainless and Autoneum.
The students’ videos will compete in the regional contest, culminating with public voting for Viewers Choice and an awards show April 2, 2020. WSCM Central Susquehanna will choose one video to represent the region in the 3rd Annual “What’s So Cool About Manufacturing?” PA Statewide Awards on April 29, 2020 in Harrisburg.
The “What’s So Cool About Manufacturing?” Central Susquehanna inaugural season is funded by a grant from the Pennsylvania Department of Community & Economic Development and was created and initiated by the Manufacturers Resource Center (MRC) in the Lehigh Valley in 2013. Innovative Manufacturer’s Center partners with eMediaWorks and Sahl Communications, Inc. to produce the program. For more information, visit whatssocool.org.
About “What’s So Cool About Manufacturing”:
Developed by Manufacturers Resource Center (MRC), WSCM program is a video based educational tool that increases awareness of career paths in manufacturing. MRC developed this innovative career awareness program that at its core is “peer marketing” (kids telling kids what’s so cool about manufacturing jobs). The contest is showcased on the What’s So Cool Website, and shared nationally through the Manufacturing Institute and the Manufacturing Extension Partnership platforms. The Lehigh Valley contest is expanding across the Commonwealth and the country. Inside Pennsylvania there will be 17 regions conducting contests this year.
This contest gives students the opportunity to connect with local manufacturers, document their experiences and present them in an educational and “cool” way. The contest was created to generate excitement that draws students towards manufacturing career paths, and CTE and STEM education.
About Innovative Manufacturer’s Center
Founded in 1988, the Innovative Manufacturers’ Center assists in connecting manufacturers in 12 Pennsylvania counties with the most effective regional, state and national resources to help companies innovate, grow and prosper. An affiliate of the U.S. Department of Commerce, National Institute of Standards and Technology’s Hollings Manufacturing Extension Partnership and supported by the Pennsylvania Department of Community and Economic Development, IMC is one of seven industrial resource centers in Pennsylvania (Chamber member NEPIRC is another) and serves manufacturers in Lycoming, Montour, Northumberland, Union, Snyder, Clinton, Centre, Mifflin, Juniata, Huntington, Blair and Bedford Counties.
More than 160 women (and a few men as well) were in attendance at Leadercast Women 2019, sponsored by Geisinger, last Friday, Oct. 18, at the Barn at Frosty Valley. Leadercast Women is the world’s largest one-day leadership event featuring all women speakers, for which the Chamber served as a Host Site for the first time this year.
The day featured talks and presentations by nine different women from various walks of life. The event was held live in the Atlanta area and broadcast out to hundreds of Host Sites around the world via web stream. The theme of the event was “take courage,” and attendees were attendees were emboldened to take courage in their daily lives, whether it be in the workplace or at home. Locally, this event also featured local singer, songwriter and motivational speaker Kj Reimensnyder-Wagner, who gave a keynote address over lunch that featured both her insights and musical selections.
The Chamber extends its thanks to all of the attendees that took time out of their busy schedules to attend this event and invest on their leadership and professional development, and also thanks its sponsors:
Leadership Sponsor
Geisinger
Media Sponsors
Bigfoot Country & Hanna 92.3
The River 105 & 103.5
Silver Sponsors
Bloomsburg University
Kawneer
PPL Electric Utilities
SEKISUI SPI
USG
From PA Treasury
Read Entire PA Treasury Note (with informational graphics)
In the last Treasury Note, we laid out the details of Pennsylvania’s retirement crisis. Too many private sector workers do not have the savings needed for retirement. This is of particular concern in Pennsylvania because the state has a much larger aging population than most. Collectively, workers’ lack of retirement savings will cost the state billions of dollars in social assistance and lost tax revenue.
In 2017, Treasurer Torsella convened the Task Force on Private Sector Retirement Security to study the problem in depth. It was a bipartisan group of stakeholders that included the Republican and Democratic chairs of both the Pennsylvania House and Senate finance committees. The Task Force held 4 hearings across the state in which it heard from experts in retirement security research, financial service providers, Pennsylvania small business owners, and officials from other states that are implementing their own plans. After many hours of testimony and deliberation, the Task Force ultimately reached broad consensus that the state must do something to address the problem, and that the auto-IRA is the policy option that makes the most sense.
Put simply, the auto-IRA is a means for workers to more easily save their own money. Similar to the 401(k) that many employers offer, a percentage of employee pay is deducted for investment in the employee’s retirement account. Through the state-facilitated auto-IRA program, all employers who do not already offer a retirement savings plan would automatically enroll their employees in the auto-IRA. The state would partner with employers to raise awareness among the working population about the plan prior to rollout, as well as to disclose employees’ right to opt-out. Just as all employers must deduct a certain percentage from employee pay for taxes and Social Security, employers would set up a new deduction that would send a portion of participating employees’ pay to their new auto-IRA account. In contrast to 401(k)s, employers do not make contributions to their employees’ auto-IRA accounts, as auto-IRAs are not subject to the Employee Retirement Income Security Act of 1974 (ERISA).
Within each participating worker’s auto-IRA account, $1,000 would be safeguarded in a capital preservation fund. This would shield the first $1,000 a worker saves from the ups and downs of the investment markets, providing the assurance that—while retirement investing is a long-term strategy that flourishes over time thanks to compound interest—a portion of their savings will be preserved even if the market dips in the short term. The rest of workers’ savings would go into a default low-cost investment vehicle, such as a target date index fund. If an employee decides they want to make changes to the default account settings they are enrolled in—for example default contribution rate or specific investment vehicle—they can always change it to fit their personal preferences and goals.
Another important feature of the auto-IRA is that it is portable. Since few people work for the same company their whole career anymore, portability allows workers to continue to save in the same plan if they switch employers, without having to worry about rolling the account over.
The auto-IRA can best be described as a public-private partnership. Through the bid process, state government selects a private investment manager and vets the investment vehicles the manager offers to program participants. While the program would require appropriations at the outset for startup costs, those costs would be repaid as the program ultimately becomes self-funding. The College and Career 529 Savings Plans provide a good example of how Pennsylvania has already successfully implemented this type of program for over two decades. And just like in the 529 Plans, the assets in the program belong entirely to the individual account owners, not the state.
As described in the Task Force’s report, lack of access to a workplace retirement plan is a key cause of retirement insecurity.
About 77% of workers with access to a workplace plan participate, while only about 5% of workers who lack workplace access will open their own independent account. In short, when workers have an easy, automatic way to save some of their income before it even appears in their paycheck, they are much more likely to save for retirement—at least 15 times more likely, according to AARP.
The auto-enrollment aspect of the auto-IRA makes workplace saving that much easier because workers do not have to take any action to begin saving. Many workers with the best intentions to save may be overwhelmed and ultimately deterred by the time and effort it can take to research investment decisions. However, a growing body of behavioral economics research tells us that the easier it becomes for people to save through mechanisms like automatic payroll deduction, the more savings they accumulate. That means we can use auto-enrollment to harness the inertia many of us face when making financial decisions to ultimately improve people’s lives.
As several small business owners stated at a Retirement Task Force hearing, employers face significant obstacles in establishing a retirement plan such as a 401(k) for their workers—particularly cost, liability, and compliance obligations related to ERISA. A state-facilitated auto-IRA program would bring the remaining employers who do not offer a retirement plan into the fold without those burdens, thereby evening out plan coverage gaps so that all Pennsylvanian workers would have workplace access to a retirement savings plan.
From inception, the auto-IRA has represented a bipartisan effort to address the country’s lack of retirement savings. It was first proposed in a 2006 article written by David John of the Heritage Foundation and J. Mark Iwry of the Brookings Institution. Since then, it has been adopted into law by six states. California, Connecticut, Illinois, Maryland, New Jersey, and Oregon. Notably, the Maryland auto-IRA bill was signed into law by a Republican Governor in May 2016, where it passed the Senate with a unanimous vote from all 32 Democrats and 14 Republicans. This year, Oregon’s standalone compliance legislation passed with bipartisan support. It was also supported by the Oregon Farm Bureau and the Oregon Association of Nurseries.
The president and CEO of the American Council of Life Insurers Susan Neely recently gave a public endorsement of a federal auto-IRA bill, stating “It is a market-based solution that can help more people save more of their own money for the good of their families’ futures.”
Numerous other conservative individuals have spoken in favor of the auto IRA, including former chairman of President Reagan’s Council of Economic Advisors, Martin Feldstein, Ramesh Ponnuru of the American Enterprise Institute, and journalist George Will.
At a Retirement Task Force hearing, several small business owners testified that it is important to them to offer retirement benefits to their employees, both for competitiveness and because it’s the right thing to do. However, they also noted there are many challenges involved with doing so—particularly cost, complexity, and liability risk. Results from a recent AARP survey of Pennsylvania businesses with 100 or fewer employees support these remarks. According to the survey, nearly 9 in 10 of PA small business owners agree that state lawmakers should support the creation of a state-facilitated retirement savings option. In addition, three quarters of respondents favored a ready-to-go retirement plan over having to stand one up on their own.
In contrast to most employer-sponsored plans, a state-facilitated auto-IRA involves minimal obligations for employers. Under the plan, employer obligations would be limited to simply adding an extra payroll deduction for all employees who do not opt-out, maintaining and sharing payroll deduction records with the state, and distributing information to employees. Because the auto-IRA is not subject to ERISA, employers cannot contribute to employees’ accounts. They also do not have to take on any of the administrative paperwork or liability risk that comes with ERISA.
In today’s tight labor market, the auto-IRA allows small businesses a step up in offering retirement benefits to potential hires without taking on the burdens of an employer-sponsored plan. This improves their competitiveness and the Commonwealth’s economy.