Good morning everybody. Welcome to New America. I'm Justin King. I'm the policy director in the asset building program here. It is exciting to have you all here today. Thank you so much. We have a great crowd here, both in terms of quantity and quality. We also have an online crowd of folks that are watching, streaming on our website. So welcome to all of those folks as well. Today's conversation is on retirement security federalism, Illinois Secure Choice, and the future of saving. Folks might know our work in the asset building program here in New America. It is dedicated to significantly broadening access to savings and to ownership opportunities, particularly for low and moderate income Americans. And I don't think you have to work that hard to see why that mission is important. And really I think at this point in our nation's history really, really vital. Savings becomes wealth and wealth in today's America is really opportunity. But unfortunately for far too many Americans, both of those things are really in short supply. Wealth inequality today is much more stark than is historically normal in America and much more stark than the more frequently discussed income inequality. The racial wealth gap is an ongoing national embarrassment. Black and Latino households hold on average just six and eight percent of the wealth of white households. And it really becomes easy and indeed I would say tempting in this space to get very pessimistic. We work in a field with talented and dedicated researchers who are constantly churning out detailed studies of financial lack of want and shortcomings, exclusion, and not to mention financial victimization and predation. I'll give one quick example because it's recent on my mind. Our friends at the Pew Charitable Trusts came out with a new study recently looking at household balance sheets and found that 55 percent of American families don't have one month's income set aside as emergency savings. I'm not a certified financial planner. I think we could probably find one in the audience today and I don't think that person would disagree with me when I said that's less than recommended. The lack of emergency savings is really well known in the asset building field. But I don't think I'm on thin ice if I say that the lack of retirement savings is a much more frequently discussed and better known problem certainly among policymakers and certainly I think among the media. The National Institute on Retirement Security recently did some public opinion work in this space and they found that the American public is on board here as well. 86 percent of Americans believe that the country faces a retirement crisis. So since everyone is already convinced I don't have to go into great detail. I don't think about why this is a topic of discussion. But I think it's important to note that there really are sort of key elements of the retirement savings gap that have some pretty broad agreement when analysts look at them. One of the things is that there's an access gap. There are far too many people that simply don't have access to an employer-sponsored retirement plan and decades of data tells us that if you don't have access to an employer-sponsored plan you're probably not going to have access to a plan at all. That's about half of the workforce in total that's excluded from the employer system. That's a big problem. And the second part of the problem that's really widely agreed on is that even when folks save they don't save enough. And so that really gets magnified when you consider that half of the workforce isn't saving for retirement at all. But it's really an acute problem. I would add a third part of that. I think there's less agreement about this but from my perspective part of the problem that's really serious is the system that we have has greater inclusivity and greater inducements for saving for people with higher incomes. And so it really leaves a significant number of struggling families facing steeper hills to climb. So there's an access gap, there's a lack of sufficient savings, there's an incentive problem. And those conditions are really connected to the wealth and opportunity gaps that we see so frequently discussed in the media and among policymakers. So as I said earlier it's easy to become pessimistic but I actually think that there's some real and significant reasons for optimism in this space. First those conditions were created by policy choices and that means that they can be altered by policy choices. We can make things easier and better for people. There's been a consistent drumbeat among think tanks like New America and among policymakers about addressing these problems and we've seen a wide variety of solutions floated. There are plans out there to make it easier for small businesses to offer 401ks. There are wholesale scrap everything and replace it with this plans that are out there. There are hybrid plans that try to marry the benefits of the old school defined benefit system with the newer defined contribution system. And also I would add into the mix there are plans to expand social security which a lot of people see as probably the easiest and simplest way to make sure that the most vulnerable Americans are cared for in retirement. I would think I think it's fair to say that most of those plans at this point are a little bit dusty. The last major congressional action on retirement savings was in 2006 which I don't want to believe was a long time ago but it it's starting to feel like a long time ago. I think senator Biss knows what I'm talking about. But while Congress has not been terribly active at least in terms of producing legislation on this front that doesn't mean that no one has been active here. We are seeing real and significant policy action and innovation happening in a couple of different sectors and it's it's really an exciting time. In 2012 California passed a first of its kind law to create an automatic retirement savings plan for people whose employer doesn't offer them one. And the law that they passed put in place a plan for a study and then after the study measured the feasibility of the plan then implementation could could happen after that. They're still in the study phases but I think what California did was give other states the permission to look at this model and say this is a real policy option that states can choose to follow. I should note in California if that plan becomes law and becomes operative it could cover as many as six million workers in the state of California which is which is extraordinary when you think about the difference that a well-run plan could make for that many families. It's not just states getting in on the act earlier this year the president early last year I'm sorry the president announced the creation of my retirement account or my r.a. it's unclear whether he knows how to pronounce the acronym yet. There's a lot of confusion on that point but I've got it right today. The basics are my r.a. is a starter retirement savings account targeted at the same population that does not have a retirement plan through their employer. There's a cap of $15,000 in total savings at which point people have to transition to another product but it's an effort to fill the access gap and get people connected to retirement plans that they don't have access to right now. We'll talk a little bit more about about my r.a. later but last year also the Illinois legislature took up and passed the Illinois secure choice savings program act. The bill was signed into law into January and now the state is beginning the process of implementing a law that could ultimately cover as many as two and a half million workers in the state of Illinois and again could break down the barrier and lead to more states choosing to take up this option and to not wait for the federal government to do something about the retirement savings crisis. There are initiatives now in different stages in as many as 20 states so i think this is this is an incredibly exciting time and i'm thrilled that we're here to explore some of these questions today there really is an incredible amount of opportunity and challenge here and i'm thrilled that we have state senator daniel bis here with us today who's the primary author of the Illinois secure choice savings program law. Senator bis is a democrat who represents Illinois ninth senate district which includes evison skokie will met and a number of towns whose names i won't even attempt to pronounce that's that's no slide on Illinois i'm from vermont i used to work for a senator from vermont and we would weed people out in the application process on whether they could pronounce town names correctly or not it's it's an awful game to play with people senator bis is a former mathematics professor and and as i said he's he's he's really the champion who helped Illinois pass this law and we're really thrilled to have you here today Courtney eckles is here with us today she's the policy director for the woodstock institute which is a Chicago based nonprofit research and policy organization that works locally and nationally on issues of really improving the financial system for low and moderate income families so that they can save and build wealth. Sam Tuttle is also here with us she's the director of policy and advocacy for the heartland institute a leading anti-poverty organization in the midwest heartland does a really amazing combination of frontline service provision and policy and advocacy work and sam and Courtney are two of the advocates who were really essential in in in shepherding and mobilizing to help make sure that the the legislation that senator bis introduced had the support it needed to become law so i'd like to spend a little time with you discussing how and why this happened but before we get into the sort of backstory senator bis would you would you give us a thumbnail sketch of sort of what the law is and what you hope it does. Sure well first of all thanks for including me in this and thanks for convening this discussion not only because it's an issue that i think is enormously important but it's an issue about which we need to have more discussion both about policy but also about the question of mobilization and public discourse so i think this is an extremely important and well-chosen occasion and i feel honored to be a partner so thank you very much. You set the stage very clearly so I'll just fill in some additional details in Illinois like in really the rest of the country about half the private sector workforce lacks access to employer-based retirement plans that winds up being just in excess of two and a half million people in Illinois as we know thanks to research done by the Woodstock Institute and like in the rest of the country that population is saving extraordinarily little for retirement the majority of that population is not saving at all and is on a path to tremendous insecurity in retirement if not literal poverty so i would characterize it as a clear and pressing and frankly terrifying human crisis and one that you know to state the obvious you don't solve today and as a consequence of that solution see the problem go away today any action taken today takes you know literally decades to really fully affect people's lives and so i i felt that it was important that we act very quickly so we spent a couple years in some of the cases some of the advocates more than a couple years working to enact legislation that sought to solve three or at least address three aspects of the problem number one as you said is the access it attempted to create for many workers who currently lack access to a tool to save at work the access to save at work number two we wanted to increase participation by making it an automatic enrollment plan so you were by default in as opposed to being by default out and number three because we're dealing with a population of typically lower and medium wage workers many of whom are at medium and small employers we wanted to create a large pool so as to help push down fees since people in those categories are often exposed to really perniciously high fees that eat away their savings in unnecessary ways quite frankly so what the plan does is it says if you work for an employer with 25 or more employees it's been existence for two years or more and offers no retirement plan of any kind you'll be automatically enrolled at a three percent payroll deduction in a Roth IRA you can opt out if you want you can choose to put in more or less than three percent if you like but the default position is to be in a three percent a board is created shared by the state treasurer who by the way has his chief of staff Julian Federle here today with six other members the state controller the governor's budget director and four appointees and the board is responsible for overseeing the program and their their main responsibility I would say are most significant responsibilities to make investment selections the default investment would be a target date fund but they may set up as many as four other options and if they do set up more than one option then of course the participant would have the right should they make an affirmative choice to to move away from the default so that's that's what the the law does a word about timing the law formally goes into effect because of some technical matters regarding the Illinois constitution on June 1 of 2015 at that moment the board is created and they have a two-year period to set up the program so it may not be up and running until June 1 of 2017 but I think that fairly long runway gives us the opportunity to do it well and do it properly make sure it's it's it runs in a way that will make other states want to replicate it rather than want to run the other direction last thing I could say really quickly is that though when we were trying to pass the bill 99.8 percent of the criticism was from the right which we'll probably talk more about later since the bill has been signed into law there's been some I think very legitimate criticism from the left and two of those points are number one hey look employers with 25 or more employees are you not designing the bill in such a way as to neglect to help a chunk a big chunk of the population you might want to help and number two is three percent really adequate and I would say that on both of those points the criticism is well taken the number 25 was simply a concession and we would hope that once the program is up and running and is easy to administer for medium-sized employees will be able to drop that number and the second thing is that the three percent was partially negotiated concession but also we didn't want the initial contribution for people who are already working to create sticker shock and drive people out of the system over time what I think should be done to allow this program when operating in its default context to create adequate savings is that automatic escalation should be put in over time yeah let me uh let me thank you so much for that uh let me make a quick housekeeping announcement that I forgot to make earlier I mentioned our online audience folks are welcome to join in the conversation on Twitter our handle is assets NAF and AF and we're using the hashtag secure choice for today's conversation if we get questions from the online audience we'll try and build those in later you mentioned that folks have been working on this for years it did you weren't able to simply wave a magic wand and pass a bill which is shocking to everyone who's been in Washington DC for any amount of time but particularly for the last call it five years Sam and Courtney you guys your involvement in this really kind of predates Senator Biss right can you can you talk about sort of when you first started pushing this solution and and you know what was the reaction like at first I mean Senator Biss and I are both in total agreement that the case four is pretty clear cut well so um around and let me just uh do a little bit of cleanup I just want to make clear that I've worked with the Hurtland Alliance not the Hurtland Institute our policy perspectives sometimes are a little bit different um but uh and and we are also the coordinator of the Illinois asset building group of which Woodstock and the Shriver Center who helped kind of seed this in Illinois are extremely close partners and sometimes when I think all of us talk about we it's a little bit of a traveling we in terms of who we're talking about um we really kind of served working on this in about 2010 I know that the Shriver Center worked with David John to kind of think through crafting some legislation um and then there were a couple of years where this legislation was kind of out there and um uh we are nonprofits we have some limited capacity and for a couple of years um really having boots on the ground and and educating um legislators about the need for this why this there's a role for the General Assembly was a little bit of a tough lift lift and all of us really needed to as advocates get in a place where we could invest that capacity to have into that conversation and then and then I'm going to turn over to Courtney to talk about the research I think a an initial turning point for us is the Illinois asset building group um invested in Woodstock to do some research and when that that that kind of first set of research came out we we started at least working with General Assembly members to understand you have a role here and that's that's you know what the solution was was a little bit still carrot versus stick conversation but that first threshold uh this is something that you ought to take up everybody started to buy into once they saw um the research and I think really those first couple years were working up to that threshold question but I don't know if you want to talk about the research sure so I I know you mentioned that there's been sort of some increasing attention to to this issue at the national level and there has certainly been national data and national research looking at the access problem and the lack of of access to an employment based plan but um what Woodstock did with with IBG in 2012 is we released a report called Coming Up Short that really looked specifically at Illinois and access to employment based plans for Illinois private sector workers and what we found was was very in line with with what you saw nationally that over 50 percent of private sector workers didn't have access to this type of plan and as Senator Biss said it's it was a little over two and a half million people which you know that number is going to continue to increase slightly each year since we put out the research but what we tried to do is take it even a step further and we looked at looked at this issue by legislative district and so we could we could sort of start by proving that this wasn't just a Chicago issue and it wasn't just a rural issue and and even when we divided things up we found that in every single state legislative district over half of the private sector workers didn't have this type of access and I think as Sam was saying that's really when we were able to say to every single policymaker in Illinois this is a problem and it's a problem in your district and that's why we really need to figure out what to do and so in 2012 you know we were still sort of working with the legislature and got a subject matter hearing and could really start exploring the problem and and at least you know teasing out what the policy solution would be and then it was 2013 and 2014 where Senator Biss picked up the bill and we really started we made some tweaks to the policy itself and then really started trying to move move forward with the legislation and gain some legs and Senator Biss what what was it that that got you to to to pick this thing up that had been out there for a period of time well i have to tell a funny story about this i i had read about what happened in california and actually met with some labor leaders in illinois who had been involved in the effort in california and learned about that and i was fascinated by it and then i went to this meeting of it's like a like a breakfast meeting that happens every year near my district for legislators in my area held by this association of insurance salesmen and the way it's structured is their lobbyist gets up and gives a presentation about how great he is and then we're supposed to give a presentation about how great he is too and then he says that we're great and then everybody goes home again feeling slightly confused about what just what just happened and part of his presentation about how great he was he explained that he had killed this automatic IRA bill in the 2012 legislative session and i was like that's fascinating i didn't know there was one and so the when it was all over i took him aside and i was like that bill that you killed what what was the bill number and and he told me and probably now wishes he hadn't but you know it it had been kind of percolating but it only gotten kind of noticed in the relevant committees of jurisdiction and you know my feeling was that there was this really committed group of advocates who had been pushing this pretty far and that what we needed to do is broaden out the coalition and so we had right at the very end of 2012 we had these long kind of complex substantive meetings with the various advocates that have just been mentioned and SCIU and AFSCME and a larger group to try to reach an approach to the policy that could get a big enough set of advocates behind it that we could then try to move things forward in the 2013 legislative session and ultimately were able to do that and then you know fought fairly hard in 2013 but didn't really wind up getting where we needed to go but you know with every passing month we're able to get kind of a somewhat bigger footprint a somewhat broader set of supporters and you know again chip away this initial skepticism on the part of some of our colleagues in the legislature who were kind of recognized that there was a problem out there but initially weren't so sure that it was the state government's responsibility to try to address it so talk to me a little bit about that policy design process right and and a little bit about where the push and pull was early and maybe Sam and Courtney like what was really different about where you were 2011 2012 versus where you sort of ended up in terms of deciding this is the these are the elements of a plan that we want to put forward sure so I can start in YouTube chime in I mean I think one of the things that we spent a lot of time discussing was the framework for the type of fund and the number of funds and that's obviously something that has been discussed in a variety of ways and originally the legislation very much mirrored the federal legislation and so it had a few choices with a default it was a traditional IRA but what we were doing was looking at California and sort of what they were proposing which had this guaranteed rate of return and we were trying to figure out a way to kind of include that piece while at the same time not necessarily pinning ourselves to have to do some research and feasibility we wanted to be able to move forward with a bill that could be implemented upon passage and so we worked very closely with AFSCME and SEIU and others and folks who've been working in California to try and craft something where we had a target date fund as the default a few other options a conservative a more aggressive and then we also included sort of this placeholder for a fund that could be approved by the board at the time in which california or another state move forward with something that would have this guaranteed rate of return so it was a bit of you know legal tweaking to include the language and make sure it was done appropriately but I'd say that's one of the big pieces that we tried to address that was a huge a huge and a big policy question based in the country is you know we've had this dramatic shift away from pensions to 401ks and it's been problematic in certain ways and part of the goal of creating these big pools is to set up a new framework that reverses some of the problems associated with that transition and the question of how far to go along that axis is one that that I think is still frankly unresolved and created a lot of a lot of complexity for us other critical policy levers that have to be addressed are where we were not prepared to make concessions our number one is there is it should it be automatic enrollment there's there's a lot of even even in Illinois the home state of Cass Sunstein and Richard Thaler there was still a lot of queasiness about automatic enrollment and then there was a lot of queasiness about what our opponents would refer to as an employer mandate and we felt that those were aspects of the policy design that were not negotiable if we really wanted to maintain a structure that would that would take a meaningful bite out of the problem but subject to those criteria we were frankly willing to negotiate quite a lot you mentioned a little bit labor was really at the table here with you guys can you talk a little bit more about about who some of those sort of early stakeholders were and then sort of growing that coalition sort of who you know who who next and and you know I'm really interested in sort of what the tipping point is between sort of folks that are invincible versus folks that are off the table yeah it's a great question so on the labor side sciu is I think it's fair to say really the only union that represents a very significant number of workers who would be affected by this most other unions that you know scu because of its health care and home care workers has a lot of workers who are kind of practically almost self-employed in some sense and therefore are without retirement options most other unions fortunately negotiate better retirement options for their members than this and so there were two labor constituencies one was sciu which was looking to help its members and one was some of the public employee unions which feel I think correctly that part of the challenge for those who are seeking to defend public sector pensions is the what people call the pension envy that exists between workers in the private sector who have little if anything and and public sector workers who have a a much more reasonable pension and so much of the discourse in Illinois frankly and throughout the country has been to take this gap and just try to push those who have down and AFSCME in particular initially felt like the this kind of approach by trying to push those who don't have up could transform the discussion and ultimately be beneficial to public sector unions who are trying to protect their members pensions I will say that eventually there was some other tension in the coalition and AFSCME amount of fairly disengaged but that that was the initial discussion you had sciu on behalf of its members and AFSCME seeking to address this pension envy problem as we went forward on the labor side other public sector unions like firefighters and laborers represent public sector workers got involved because of this pension envy argument as did the AFSCIO in Illinois for roughly the same reason now we also found over time that we were able to engage more social service providers simply because they recognized that the people they served were heading toward a real crisis in their twilight years and so that was a an important ratifying voice as we sought to make the argument and then we also worked very hard with opponents to really understand who was totally off the table and who was kind of potentially guedible so for example the the life insurance industry was off the table they they were going to lie down in front of a freight train to stop this from happening but that didn't mean that the entire financial industry was so we actually had supporters in the financial industry there's a a lobby that was formally known as the American Society for Pension Professionals and Actuaries it has renamed itself the American Retirement Association who has been a supporter of proposals like this around the country including in Illinois and then we found some aspects of the financial industry who had initially kind of as a I think it's fair to say instinctive or almost knee-jerk basis just been opposed we kind of sat down with them and walked them through it and they realized this is not our fight to have and they were willing to disengage and so over time what began as a small group of very passionate people on our side with essentially the entire rest of organized interests in the state capital against us we were able to grow you know grow our group of supporters and move some people from you know being opposed to being either formally neutral or else functionally neutral and those efforts turned out to be pretty necessary I think to get it done Sam was it was it it sounds like there's a lot of sort of education and it was probably a touch heavy process to bring people along but you know you were involved in some of these efforts to to educate folks and also to sort of finding out firsthand who some of the folks that were off the table for you guys were is it is it really purely sort of about having the opportunity to to literally engage and educate people or did you find that there were sort of messages and sort of broader scale things that you could do things that would play play a little bit more to to a mass audience well I think there are key things that especially kind of in the last year I mean if we're looking at five years but the last year had a lot more touching of everyone than in previous years you know that these are our folks own money I think you know we kind of were able to develop some talking points but even before that I remember one of the first conversations I think Courtney and I had with some of the financial institutions when we were working on other legislation there was a well we don't think people can save for a lower income and kind of just initial almost from anyone regardless of their position kind of questions and and I do think that's part of the the kind of multi-year process is is getting folks past those questions the same thing with should this be automatic and and so a lot of those initial conversations with opposition with with folks who kind of came on board getting people to to kind of add their effort were about getting past those lines and then and then you're in the final stretch and there's a series of talking points where you're where you're lining up people and to a certain extent I I do think it's important to talk about once Senator Biss got on board we also had a messenger who who kind of came back to everyone over and over again it's it's not just what we were saying but also not letting people go and that's important because this is it this is we kept saying this is a big bill it takes people time to become comfortable with this legislation even if they will you know eventually get there and and in some ways I think that's why having those multiple touches and kind of just coming back even with like it so there's this is important because people need time to get their head around this legislation I think particularly for general assembly members who aren't very accustomed to to thinking about these issues so I think I think in addition to that absolutely I mean just on its face this is a somewhat complicated thing even though you know we marketed it as a very simple plan but I mean retirement savings in general is not simple so it's certainly required a lot of education just to help people understand what the program would do but I think another important piece for us was this continued touching and partially that's because the arguments from the opposition continued to change I mean you started off with sort of this basic we don't need this because you already have IRAs in the public sector so really needing to address the point that most people don't go out and get something on their own or they don't have the amount of money that you need for an initial deposit we had the people can't save if they're low income argument so you needed to address that but it was sort of a fascinating process because as we found ourselves gaining ground we found more and more new arguments as to why this wasn't good and maybe we'll touch on some of these things but I think you'll find that states across the country heard the same arguments but pieces like you know this is a government-run program especially in Illinois we don't know how to manage our money and our budgets so we constantly had to remind people that it was a board but the board would be putting out an RFP so it's a private investment company just like what you and I have with our retirement plans and there were a lot of arguments about ERISA and employer burdens and so it's just each one of these pieces that came forward you know we had to go back to sort of the full swath of legislators and make sure we still had their support and then continue to address these points with with policymakers that we needed to still get on board so it was a lots and lots of meetings lots and lots of touches I guess was this did this jump at a certain point to to a point where it was a public issue where the was the the big media in Illinois involved and and was you know to what extent I hear sort of interest groups across the board having key roles here but to what extent did this become a part of the the public's conversation in Illinois not enough I would say I would also say that several different relatively high profile in the context of the state of Illinois reporters and media entities who I had badgered like crazy for two years to pay attention to this after a pass they're like where did this come from what what is this it seems kind of important how come how come no one ever talked about this before and on some level maybe that even helped us but it we had a great deal of trouble making it a big issue you know that we work closely with ARP and they have a history of having really successful big community forums and we had like a big big churches you know we would have these forums and the room would be set up for 200 people based upon previous attendance for similar events it was just hard to get people in the room there'd be a lot of empty chairs so we candidly struggled a little bit to get significant genuine grassroots public interest partially because the there just wasn't ever quite enough coverage and partially because I I think it's a complex issue. Sam McCordney? Well I would agree and say that I think that this is for for advocates who are looking at at moving this this is a challenge I mean you know Heartland Alliance also has been working on increasing minimum wage in Illinois which has its own set of challenges but that is an issue that mobilizing people and kind of creating noise is a little bit easier people feel like that that that benefit will come tomorrow they understand and commit inequality and so so that's a different process where I think where we or Senator Biss was able to create a sense of of noise was when we finally got endorsements from the Chicago Tribune and the Suntimes and the state journal register and that at least has a sense that this is this is the time to act I do think it's a it's kind of a hard not to track for not to crack for advocates in terms of how to create a real sense of grassroots mobilization on a program where the the kind of benefits are coming multiple years later and where you're sitting today may not be you you may not need secure choice today but you might change jobs and you might need it later and so it's hard to touch and and that's something I think that was a constant struggle and we were always working on but it is something that we don't have the answer to when and we'll continue to be something that we work on and implementation just getting the word out. So you know I think for me there's a sort of picture that's coming clear of sort of who you know who's in your role here it seems like they think you did a good job but you know there's sort of carrying the ball down the field and then there's punching it into the end zone and I'm gonna do two different sports for different analogies later just to try. The other one is curling. How do you throw the rock and have it land in my house? Really I mean no I think there's an honest question here about sort of you know how do you how do you sort of make this happen at the end of the day how do you sort of you know get you know having the legislation and the cosponsors and the editorial boards and then how do you have the vote and how do you win the vote so is there is there last yard strategy? I'll say some stuff which will be very unhelpful to people who are trying to generalize. Our legislative session adjourns at the end of May this was a big election year for us the governor was up for reelection. The Senate passed the the bill sort of during the regular calendar in April with no votes spare with democratic votes only and there I think it's fair for me to take some credit I was just insufferable. I just you know would not leave my colleagues alone and they figured that if they voted for the bill they would then I would shut off and and so that was kind of how we got that that done and then we did not have the votes to pass the bill out of the house that spring before adjournment we worked it very hard we spent the summer schlepping around the state of Illinois while everyone else was campaigning we were trying to cut members of the house to focus on a retirement savings vote that might happen after the election and did a lot of work then while no one else is doing any work which is very very helpful that was a situation where we you know we had the field of play to ourselves it was you know like everyone on the other team was in the penalty box simultaneously and that was incredibly helpful to us and all summer long when allies particularly allies out of state asked so guys are you going to be able to do this I said the same thing every time I said it's going to depend on the outcome of the election but I can't tell how and that turned out to be true and two things two and a half things happened three and a half things happened the first thing that happened was that the there was an advisory referendum on the ballot regarding the minimum wage which passed with tremendous majorities but for complicated reasons that are beyond the scope of the discussion but interesting for us to talk about over lunch if you're into that kind of thing we were unable to pass a minimum wage bill so there was this momentum to do something for low-wage workers reified by a referendum that we then didn't act on in the natural way that was number one number two the democratic governor got trounced frankly in the election much to the surprise of in controversial with the polls that's those kind of a shocking outcome to many people at least a surprising outcome to many people and then number three and three and a half are that the treasurer's election was basically a tie on election night and there were two weeks of vote counting which resulted after during most of those two weeks the republican nominee having been ahead by a handful of votes at the very end the democratic nominee pulled ahead and won by by a tiny tiny margin so we came into the what's called the veto session that happens right around Thanksgiving with this mandate from the public to do something for low-wage workers but we couldn't get minimum wage passed it was the end of the term of the governor who wanted to do something and was very upset we couldn't get minimum wage passed he was going to leave so if he was going to sign the bill it had to happen soon and then this democratic treasure had just been elected and basically with all this attention because election result isn't usually announced two weeks after an election basically the first thing he said is hey this is really important I want to implement this program I want to surpass this and so his I would say his significance in the political discourse in Illinois was very great then because he'd won this dramatic way and for democratic legislators he was our one kind of success story in the election and he really instead of going on vacation and celebrating he turned around and started calling legislators and working very very hard on the roll call and also working on leadership to encourage them to make a priority and all those factors together resulted in democrats lining up and wanting to vote for the bill and passing the bill if some of those three things that turn out differently I think the outcome would have been different you could imagine you could imagine all of those things turning out differently and the bill passing with a really different roll call like if the republican nominee had won for treasurer then announced he wanted to pass it maybe we could have passed it with a more bipartisan roll call who knows but it was clear that all these different variables were going to land in a way that would impact our chances in the November session we were fortunate to land off in the way they did never ceases to amaze how inadequate I'm just a bill the schoolhouse rockers is it's harder to communicate what actually happens but actually much more interesting Sam Courtney yeah I was just going to add in one sort of additional piece to that and and this might be helpful for folks who are thinking of trying to do something similar in their states so you know we've talked about our our sort of stalwart non-profit advocates who tend to have little influence but do lots of nagging and then you know we talked about how we sort of built this larger broader coalition and brought on financial institutions and financial entities where we could but I think another piece that it was certainly something new for me and something that I would suggest folks in their state look at is when it came right down to it even with all of the different politics that senator best talked about you know we were sitting right on the edge of we need three or four votes and we've just got to get them and we had the opportunity to use some some resources that we were able to get to higher contract lobbyists which is you know different if you're if you're non-profits who tend to just sort of work with work with your own but it was it was amazing and wonderful and I would say absolutely crucial to the success that we had because you know for for folks who do this work often at the end it's going to come down to relationships and who can actually get that last meeting in with these final legislators so we hired for very short contracts a few legislators who were able to sorry a few lobbyists who were able we did not hire legislators we did not hire legislators goodness so we were able to hire lobbyists who helped us immensely during those last few weeks sort of right before the veto session after the election and then during the weeks of veto and it was that sort of three to four week period of time that was that was crucial and so you know it's a bill that requires educating it requires doing as much as you can to bring on non-traditional allies but it also requires a lot of very strategic political thinking and taking advantage of opportunities. I have a I have a burning question but we're approaching the point at which we're going to shift panels so I want to throw it open to the audience we have a second panel today our second panel is really going to focus on how this effort fits into the national picture and so if you have questions about that you know hold on to them we will get to them we have an incredible second panel but for these folks in this question of sort of the how and the why in Illinois I'd love to take a couple questions from the audience great we will start right there in the back we have a microphone and give us just let us have it. I'm very interested in the pension MD aspect that you spoke about maybe even particularly the decay of AFSCME interests and support of the legislation. I think there's a really important strategic question that the people who are working specifically on the pension envy question need to ask themselves that are asking themselves which is do we want to take a posture of gradually lifting people up who have nothing to have better and better options or do we instead want to take a position that the shift to define contribution schemes is unambiguously to be condemned and if we take that second position is supporting any kind of option even if it's an improvement for some workers but exists in the defined contribution context is that simply beyond the pale and I I can't speak to the internal discussions that AFSCME had but my sense is that they eventually concluded that that defined benefit pensions are under attack and that supporting anything in the defined contribution world is just kind of too dangerous on a messaging level for them. I'll tell you I personally land obviously in a different place I think that that there's so much discussion about this and the inevitability of this that talking about this instead even though you know 80% of the public says they want it when they're talking to pollsters talking doing this is sort of a paradigm change in the heads of most people who are involved in policymaking and I think it's got huge spillover benefits but that that debate is still ongoing and I think not resolved yet. Let's go right here. One question might be how to clone Senator Biss but short of that is there any well I'd like to ask about the 20 states that have something percolating and if there are any trends among those states that you see and also is there any thought of publishing a toolkit sort of it's such an interesting story how you did it or things that might work other places to bring this to scale. I see this paper I love this paper but something more sort of easier to read shorter type thing and maybe just taking this and and putting it in the toolkit form. We will get to the first part of your question later Sam and Courtney I would sort of throw you under the bus and say that though you are resources I think who are willing to to be out there for people but is there a toolkit in the works or? So we've actually I don't know if you guys we've talked about that sort of thing because you know I think a lot of what you hear is the specific substance of the policy and the decisions we made but I think some sort of toolkit that helps you think about okay now that we have this policy that we want to implement what are some ways that it might be useful. Something we've talked about I don't know that there's any sort of formal process but it is helpful to hear that that would be useful and I think something that we'll think about and I know the the conversations about implementation there's been a lot of sort of proactive discussion about making sure we document that very carefully so that it's something the treasurer's office could share with with others so maybe a toolkit that covers both and we have let's go one last question here in the front middle wait wait wait wait for the microphone sorry the online audience the masses thank you um so I'm curious about you know in passage you guys talked about sort of the lack of how difficult it was to build grassroots support you've got two years before this thing goes live and unlike the 529 plan which is entirely voluntary right you're going to be taking money out of two and a half million people's if we're lucky two and a half million people's paychecks like what's the sort of grassroots work that needs to get done so that gets perceived as a positive thing and not a negative thing that's a wonderful question and certainly we're talking a lot with the treasurer about the education component of this I think that our failure has been to get bogged down in the technicalities of the solution in an environment where there is broad public anxiety about the problem I think if we can connect this action to the very real anxiety about the problem then we have a real opportunity to you know be viewed as helpful as opposed to just kind of confiscatory that's actually a great transition note I would like to say thank you to Courtney Eccles and Sam Tuttle who's from the Heartland Alliance Courtney's from the Woodstock Institute would you join me in giving those guys a round of applause and we're gonna we're going to transition from our first panel to our second panel while we do that I think I think we actually have the opportunity senator bis I have a I have a burning question you said or in the conversation we just learned you know the original model here was a traditional IRA and you chose to transition to a Roth IRA I I actually have a I think this is a this is a great move but I but I think this is a great move for reasons that people that I totally respect and Revere really think it's it's a bad idea and for me it's really a connection to to me the lack of emergency savings that Americans experience which is really intense and really real and the lack of retirement savings are really connected but when I attend a lot of conversations like this one here in Washington DC they tend to be purely retirement focused and there there's little acknowledgement of the lack of emergency savings and in fact there's a really negative attitude towards people that go to their retirement account when they're in trouble and take money out you know that's leakage that's you know those unnecessary withdrawals I think you know the data that we have there suggests there's a certain amount of frivolity that occurs there but but it's much more likely that these are people who've run into hard times don't have other good choices that are ahead of them the Roth is a totally flexible vehicle people can take their money out of a Roth at any point essentially it's a souped up savings account I think that's a good thing have you thought a lot about how that flexibility is going to play and does that tie into the question that was just asked about you're taking money out of people's paychecks yeah it's a great question let me say three things quickly about it first of all on this direct question of leakage as people often call it we have to have a great deal of respect for the views of people you you you come down on the other side from because the nature of the problem the whole issue here is that it's really hard for all of us to plan many decades ahead and to kind of appropriately sacrifice now in exchange for having a decent quality of life later and there's no question that the traditional IRA kind of is a nudge in the from that point of view right direction in the Roth isn't but there you know there are emergencies we're talking about people with experiencing significant financial challenge and in many cases real financial hardship and I do think particularly if we're going to all of a sudden start taking money out of people's accounts having that flexibility is at the end of the day I think better than not the second thing to say just obviously from a pure financial point of view the decision about Roth versus traditional is a bet about future earnings and future tax rates and various from person to person as well as how history develops but I think for the majority of people that were seeking to help it's likely to be a financially more advantageous move over the course of a lifetime and last thing I would say is politics of course never failed to play a role in all of this the fact that a Roth doesn't come with an immediate budget hit is definitely advantageous in seeking to get a bill passed and you know the if you think about at the time that we were working on this we had a five percent income tax rate five percent of three percent of even a low wage of millions of people is a pretty significant hit to the state budget in an environment where Illinois can't really afford it and so that was that was an obstacle that we we really couldn't get passed without changing the structure so as to essentially eliminate it yeah thank you that I mean I think we can spend a lot more a lot more time on that but we're joined by three really renowned experts in the field for our second panel thank you all for being here we've just had a great discussion about the sort of how and why of Secure Choice I'd like to see if we can pull the lens back a little bit take a look at what's happening in other states and what Secure Choice might mean for them and I also think we ought to put it in the context of sort of what's happening at the federal level marky re is here marks the senior advisor to the secretary of the treasury and is the deputy assistant secretary for retirement and health policy there mark is behind countless parts of current retirement law including the savers credit and the simple IRA and has really been a major force in efforts to expand automated retirement savings in the workplace he worked with David john to develop a proposal for the automatic IRA which I think we've heard confirmed today but under any circumstances it would be safe to say was a model for Secure Choice both in California and Illinois so mark thank you for being here today David John is here David's a strategic strategic policy advisor for the AARP public policy institute he's the co-director of the retirement security project at Brookings and has been working on retirement security issues for a couple of decades here doing incredible work Angela Antonelli is here as well she's the executive director of the Center for Retirement Initiatives at Georgetown University she also has a distinguished career working in Washington's alphabet soup yeah you're welcome I said I said I said distinctly that's good it's true and you're doing really interesting really incredible work at Georgetown at a new senator that's looking at and trying to support some of these state-level initiatives so I'm really glad to have you all here today mark can you kick us off and and give us an update we talked a little bit about my IRA earlier but I'd love I'd love to hear an update on what the administration is doing in this space how the administration used these state-level efforts and a word maybe about the the interplay therein it's a pleasure to be here thank you for putting this together it's great to be here with all four of you oh I'm not on here okay so again it's it's great to be here it's a pleasure especially with this outstanding group of co-panelists and just to defend myself from your introduction a little bit I'm I've been involved in or may be responsible for a lot of the things that are in the law today but only the ones that you like the administration has been involved both at the legislative proposal level and at the administrative level you spoke about the automatic IRA proposal this comes out of something that David and I worked on back in 2005 2006 that was rolled out at the heritage foundation and sponsored by the retirement security project and heritage and the subsequent organizations that have endorsed and supported it are quite a few but ARP has been there from from the beginning we were fortunate enough to have bipartisan cosponsorship in the senate in the house of this automatic IRA concept and Daniel in Illinois has really been I think the first to arrange successfully for legislation to be enacted and signed into law in any jurisdiction that would move this forward it is the Illinois version is very much like the federal version and you may have mentioned in the earlier panel one potential difference and we can discuss this later which would be of interest is that the federal proposal to automatically enroll those who don't have access to an employer plan who don't have 401k or or something similar a pension at work to automatically enroll them so they can choose to opt out if they don't want to participate but it'll find it easy to participate by just going along with the default they do want to participate in iras would involve for the most part a very heavily private sector oriented IRA investment approach in other words the iras that people would be invested in would be provided by the trustees and custodians who provide iras today those who are willing interested in providing a set of investments that includes a default investment that is low cost and that is something like a target date fund with an alternative that would be principal protected and in illinois i know last time we spoke you were still working out the specifics how your board and your trust would approach the investment issue the federal version is a very private sector oriented one the my r.a. which connects up to link in this administrative initiative is actually connected to this federal legislative proposal in the in the following way the idea would be that employers that don't choose to sponsor a retirement program of any kind that would have more than 10 employees in illinois i think your 25 was your cutoff would be called upon to automatically enroll their employees in these payroll deduction iras easy convenient way to save same as our 401k saving mechanism essentially and the employer would get to choose how to do that they could tell their employees and i'll go to iras at this financial institution that's my financial partner we work with first national bank of our state or we work with this mutual fund brokerage firm insurance company credit union what have you a sponsor of an ira or they could say every employee you just tell me where to send it to your choice of an ira and we'll send it there just as we do your paychecks to whatever institution you want to your paychecks and to electronically or by direct deposit or and this is all with a view to making life as easy as possible for the employer an employer that hasn't chosen to adopt a plan so if they prefer neither of those but rather just let me have some destination for this that involves no thought on my part and no decision-making you know i'm like most small business owners and managers incredibly busy striving to succeed i'm not in the business of administering retirement programs i'm in the business of the business i chose so they could send it to a us savings bond at the treasury as a temporary destination to make it easy for the employer and it would then in time roll into the private sector roll over tax-free into private sector iras with the us savings bond as the temporary investment we then took that element of the legislative proposal and moved forward with it administratively because that doesn't require legislation the treasury has issued of course us savings bonds for decades and has authority to do that without new acts of congress and we announced last year at the treasury department that we would put into the market a treasury savings bond that was updated no fees easy to use we called it the my r.a. for my retirement account it's a Roth IRA with a us savings bond in it so the bond is the only investment the Roth IRA is the tax favored vehicle in which it's housed and it's for new savers the ideas the tens of millions of americans who are the target of the illinois program and the various other state programs that both of my colleagues over here have been working on and read and new america and and others the same target group essentially those who aren't saving today and the thought here is not that this will solve the problem by no means but that at least some of our non-saving fellow citizens might be induced to start saving for the first time to get into a saving habit through a very easy method of saving payroll deduction of being the first approach the employer could again send money that the employee chooses to save into this IRA it would be held a treasury as an incubator for the very small accounts that are so small that the private sector might not be interested in them or that might be consumed by administrative costs and thereby shrink rather than grow even if they're generating some earnings so as an incubator the treasury would step in it's a kind of market failure situation here where at some level the trickle of contributions and the balance in the account is so small that it's hard for most of the private sector providers to break even on it we would offer a very easy to use user-friendly new kind of bond and this is now starting to actually be implemented you could just add to it you don't have to buy additional bonds additional units it it is like an account just contribute to it and the bond grows in value because it's held in a Roth it's got the tax tax advantages of a Roth IRA and it's got the retirement orientation of a Roth IRA but does have the ability to pay out amounts that are return of your contributions not the earnings but the amount you put into it returns those tax-free without a penalty the contributions come out tax-free if you meet the requirements of a Roth which require a holding period and reaching a certain age but if someone is desperate and needs their money back they can actually get what they put in back out of it in the short term without a penalty not the emphasis not what we want people to do but recognizing that if we're going for the lower and moderate income population whom we really most need to encourage to save this is a kind of safety valve through the Roth design the thought is when people get $15,000 if they reach $15,000 accumulation over the years in this they would roll over to the private sector and roll over any earlier time they wish if a private sector IRA wants to take a roll over from one of these my IRAs the individual and the IRA trustee go ahead and do that so that's the gist of it because it has no fees no minimum balances it's very much oriented to the moderate lower income population the employers would choose to participate in this my IRA this administrative initiative that we are actually already launching and a bunch of employers have already volunteered and we're working the very initial phase of a kind of careful phased implementation with a limited number of employers in order to make sure that everything works properly the pipes are all working that we if there any kinks we get them out of the system before going to larger scale and so far happily everything looks like it's working well the individual would could would decide whether to contribute or not and the as David and I developed when we did the original work on the automatic IRA legislative proposal which differs from this because it's legislative it would require employers above a certain size who don't sponsor a plan to serve as a conduit through their payroll system for their employees and to auto enroll the employees the my IRA the administrative proposal just asks employers if they wish to participate they can and for various reasons the employee makes an affirmative election to contribute we don't we're not ready to start automatic enrollment with that at least at this stage the connection here between the my IRA and the state programs has begun to be drawn by some people some folks have said to us would you be willing to make the my IRA available if employers in a given state said we're interested in using it through the auspices of the state whether the state government approached us or the employers approached us as an investment that the state could offer as part of a program secure choice or whatever it it were called a program of payroll deduction or other contributions to IRAs and it would appear that this could work perfectly well if a state wanted to use the existing my IRA as an investment for employees in the state or employers that are doing payroll deduction but that hasn't been worked by us certainly we've just been approached by various folks asking could that be a possible marriage here a concept we very much welcome input on this and i would note that again when david and i were working up the the kind of mother concept here of automatic enrollment into payroll deduction IRAs we were thinking not only employers but self-employed or other folks right to have the opportunity to just directly contribute and the my IRA carries that thought on we in time as soon as we can reasonably do so want to add on the ability for anyone regardless of their workplace or employer connection to just contribute including finally and again shout out to read kramer and the new america foundation including the tax time saving so last thought here to put put it together as you requested if people get refunds as we know new america has been doing great work and and others have as well on this the refund could be at the election of the taxpayer direct deposited into a saving vehicle like an ira you can tell the irs i'm getting a $2,500 refund i've got plans for it but you know $500 of it i could spare that to save and i'll please just send it to an ira here's my accounting account number my routing number uh or to buy a u.s savings fund actually you can do that with it again thanks to the the good offices and work of new america and other other groups so the irs has been very helpful in making those programs possible the treasury folks really got this done during the bush 43 administration a wonderful bipartisan effort that started in the clinton years and got came to fruition under the office of tax policy at treasury and the irs during the the latter part of bush 43 and is being carried on now in the obama administration so that's a kind of thumbnail of how a lot of these things tie together mark that that's terrific thank you i actually think that uh you know there's a natural impulse to think about competition here but i actually think that there's a lot of interesting possibilities in terms of having these programs work uh collaboratively in the future angela we've had a question already about about things that are happening in other states senator bis told us in california kind of unlock the door for illinois is illinois unlocking the door for other states what's what's the state by state picture look like now if i could begin just by saying thank you for allowing us to be here we're the new kids on the block the georgetown center for retirement initiatives so it's something that the folks that are involved in the center are incredibly passionate about and we hope you know i'm sitting with folks who've been in this movement for a long time and really pushing the boulder up the hill for some time and we're just coming into this game and we hope we can help uh help with this movement and finally get this boulder up to the top and stabilized and making uh uh hopefully millions of americans better off over time so the objective of the georgetown center is really to focus on working in a bipartisan way and continuing what has been a long tradition in the specific area of working in a bipartisan way to develop legislative innovative state policies legislation and administrative models that are going to expand the availability and the effectiveness of retirement solutions and as senator bis justin and others have already said so well and laid out the issues with retirement and security again this is an issue that from um and from you know terms of economic concerns within this country gallop polling 14 years has shown that you know concerns about retirement security is top of the line and on the mind of most americans um we want and and if this is one of the top concerns you know we need to continue to do our best job to take the message out there and make the case and convey those concerns to policy makers and have them take action to address it i mean 18 percent of americans are competent only 18 percent are confident they're going to be able to live comfortably uh in their retirement years and more than half of workers plan never to retire and feel like they have to continue to work their entire lives and we all know about the lack of confidence that americans have about their abilities to provide for their basic needs in retirement and again as already noted there are a staggering number of american workers who really a lot of small businesses work for small businesses and don't have any access to any kind of retirement plan i mean we're talking about more than 70 million americans uh and even for those who do have access to employer plans as already noted the amount of savings that we're talking about that people are able to achieve is relatively small somewhere in the 14 000 range and with ira's i think even with uh 401k's it's a relatively modest amount somewhere in 18 000 range these are numbers that are not acceptable as we've shifted over the past 30 years from defined benefit towards more defined contributions and we've in fact shifted all the responsibilities to individuals to take that responsibility and assume the risks and saving for their retirement and with the average social security benefits around $1,300 a month and if in fact you look at overall the overall asset picture for most families whether it's their home equity their ability to save they actually have very little and so what are we looking at in the future with with regards to a demographic silver tsunami of of families and individuals who really won't have much more other than social security to retire on and what are the implications for the states in the future with this tsunami what does it mean in terms of housing food transportation and other social service needs and and what are the implications both at the federal level from a budget perspective and at the state level as we move forward so do we take action now and try to help people save more or do we just simply continue to stick our heads in the sand hope the problem is not really as bad as what we have been hearing and that everything's going to just turn out fine or we may have some really severe budget issues that we'll have to continue to deal with so the center for retirement initiatives is really focused on working collaboratively in a bipartisan way and being a resource to the states a clearing house for the states helping to bring states together we have so many states and i'll get to that in a second who have been developing and designing models auto ira is the most predominant at this point and we want to help them not every state reinvent the wheel bring them together will be a source for dealing with a lot of the issues key issues that they're dealing with in terms of legal and regulatory issues whether they're at the federal level or state or otherwise cost issues budgetary issues but again to be a resource for the states to track what's happening in the states and to work with the states ultimately to develop models every state's different we take the position you know let the states lead states have been innovative in a number of different areas they are continuing to be as we see with illinois and the leadership there innovative and moving the ball forward so you know let a thousand flowers bloom we want to be a resource to help those flowers bloom and provide resources research and assistance to help states develop the models that work best for them so what's happening in the states today there's at least 24 states in recent years that have considered plans or studies to examine the ways to address the issues of private sector savings and amazingly in 2015 again I think we're reaching a point where again a lot of the work done by by folks that I have the pleasure to be sitting with here and many others for some years the folks at the Woodstock Institute and the Heartland Alliance the state-based organizations that have year after year keep coming back on this issue we now have in 2015 we're three months into the year and we have 16 bills that have been introduced around the country ranging from the secure choice models to study bills and three have been enacted I count illinois because it was in fact signed if i'm not mistaken in january even though action was taken in 2014 to move it along and then most recently in march we had utah and virginia pass study bills so we have 16 states have taken action three enactments so far I think it's possible that we may see one or two other states cross the finish line and i'll get that get to that in a second so in terms of plans that have been enacted we we've already talked about california and illinois they're the big guys states that have been out there and bravely taken it on california in 2012 and illinois this year starting to move the ball forward and then we have a number of states that have enacted studies to look at the issues I think that's also a great strategy I mean if you have to do it incrementally start with the study start to make the case start to look at the issues start to see how it's going to work in your state every state's different demographically with respect to its economies its small business its workforce so look at what your state is dealing with and what's going to make most sense there canada kit minnesota have been studying the issue since 2014 and they will continue to do so through the balance of this year and we'll see at the end of this year and beyond they will be issuing reports typically with principles and other basic design characteristics that seem to be most suitable for their states and then again as I mentioned utah and virginia have studies that they've enacted and we'll move forward this year with those and the and vermont in 2014 also had a study so you had connecticut minnesota and vermont vermont had some issues with respect to tight timing and funding and has asked for an extension to be able to study the issues in vermont beyond 2016 so overall five states have been actively and will begin to actively study the issues and then we have the secure choice model bills we had three that were introduced very recently massachusetts mariland and new jersey and then we have other states that have done so in the past but have not yet picked it up again let me just say for all of this information that i'm providing to you you can go to our website cri.georgetown.edu we have an interactive map on the front page we try very hard with the huge number of resources that exist at the moment at the center and some great students to keep up to date and folks are really good about giving us updates about what's happening in their states but you can go on there and click on any states that are that are taking action and certainly to the extent that you see things happening you know please feel free and my contact information is on the website to reach out and I welcome updates that are provided so you have a number of states with the secure choice model and then quite honestly the other models are very similar they might not be called secure choice and largely the major difference is the mandatory voluntary issue so we have six others that were introduced in 2015 in indiana kentucky massachusetts north dakota oregon and washington state massachusetts is interesting because it's kind of this hybrid model mass is actually taking an interesting strategy they've been as far as i can tell they've introduced a couple of bills one is the traditional secure choice but then they're also saying okay let's let's put another model in there and see which ones can move now mass already has a 401k nonprofit plan that they've had implemented now for two or three years but so they have the secure choice but they also have now a sort of IRA 401k you know both tracks also it wrapped up in in a legislative proposal so they're looking at both masses is one of the states then we can get to the iris issues but is one of the states that has not necessarily been concerned about making sure that things are are not covered by iris so they're willing to sort of look and fit within the the legal and regulatory requirements of of iris uh or again again is moving forward um they have to take um their proposal again again all these auto enroll payroll deduction issue of mandatory and voluntary on the employers um or again it has to have some provisions in there that require them to look at various issues and and assess feasibility market analysis things like that and then the thing the other i think which is the model that's probably the most different and kind of standing out at this point and has moved quite far in the in the legislature is in washington state washington state has a marketplace model so if you think aca and health care and what we see i think that's probably a similar analogy where washington state is basically saying look we're going to set up an internet-based website it's a marketplace you have to have these different types of ira models and then one of the other models you have to include is my r a so this is a perfect example of where you're taking what the federal government is doing in their proposals and integrating it with what the states are doing so again washington state marketplace model multiple options multiple types of products not surprisingly it's the uh opposition from the financial services industry uh that's been longstanding um is has dissipated um with respect to this particular model so there is support of of this effort and therefore it's been able to move relatively quickly through house and senate and there's the only differences as far as i can tell at this point in terms of reconciliation is just how it's going to be funded the dollars and the provision of funding there's some debate where we've seen in some cases again tight fiscal situations can you appropriate dollars to support implementation in other states like california they've had to reach out to private sources to help them do some of the studies and be able to move forward so hopefully that will get reconciled and hopefully the state will actually appropriate dollars to be able to move the washington state model forward and then again colorado new hampshire west virginia wisconsin or other states that have introduced study bills that haven't haven't progressed so that's what's happening in the states it's exciting but why is it important and why is elinoy important you want to do that david actually that is actually like great transition point to you david a rp's been involved at the state level as well very much so and you have you have some history here as well can you um can you tell us a little bit about sort of a rp's work and really i'd love to hear sort of about your perspective on on the policy question here sure well first this is actually an important day for me for a rp because it was exactly two years ago today that i joined and i will say that it was with a certain amount of trepidation that a guy from the heritage foundation showed up at a rp to start a job on april fools day and i was grateful that there really was a job there that explains all your tweets about april fools day there we are but it one of the things that i managed to do by joining a rp was to join a really good team of people who are working on this issue we work very closely with senator bis we work very closely with a variety of people probably in about 30 states at this point there is actually a member who does the real work in the back of the room there jerry madrid davis who is in the far left and uh goes out from state to state and jerry is a uh an excellent manager who among other things hires really good people so if you come across sarah meshevitz gill who's from illinois et cetera uh she works for jerry now we are active in several different ways in the state issues uh one is that we do have 50 state offices that uh what we would call work and save is a priority of a rp and is actually being pushed in many of those state offices we also work on the policy area i'm in what's called the public policy institute at a rp it's sort of our internal think tank and among other things we have a website the state retirement resources or retirement savings resource center uh which look has a variety of policy papers including some evangelists and various others to try to help people shape the policy and put it together and that's a rather crucial issue i mean one of the things that we're looking at that angela referred to is the whole question of how does this fit with an erisa policy and we've got a paper up there angela's got a paper and there are other papers that we will put in there and let me just make something very clear erisa is a good law erisa provides protections for workers who have retirement savings plans and those protections need to be honored and actually strengthened erisa is not intended to protect industries from having competition in markets that they don't do a very good job in erisa is not intended to protect employers from the slight inconvenience of putting together a payroll deduction retirement savings plan set up by the state erisa is intended to allow people to save and it should not be used to prevent people from building the kind of retirement security that they need to have and that's one of the things that we need to focus on both at the federal level and at the state level we talked a little bit about and then you mentioned automatic enrollment and automatic enrollment is crucial because if we look at the research for instance that has been done by a variety of people at the excellent paper in illinois and we are actually about to put up a paper on implementation costs that was produced by your organization there we look and we see that of the five groups who are most likely to under save and this is true nationally and this isn't true at every single state women minority groups younger workers lower-income workers and employees of small businesses and that automatic enrollment works in every single one of those areas to bring the participation rate from somewhere in the 15-20-25 percent range up to the national average so automatic enrollment is crucial but automatic enrollment is also incredibly popular among the workers we participate both as AARP and my brookings project with FINRA in a group called retirement made simpler with an R at the end because somebody else got the other website first and uh we did some polling of people who had been auto enrolled and among the workers who were auto enrolled and stayed in the program it was like a north korean election 95 96 98 percent like it they knew they started saving earlier they knew they needed to save earlier etc etc amongst the roughly 15 percent 20 percent in some cases who were auto enrolled and opted out we had support ranges in the 80 85 percent range so in other words when an employer looks at this and says well gosh i don't want to make my employees angry or things like that we have information showing that this is something your employers employees want and last but not least when mark and i were working on the auto ira we had a very good company that did some research with us and they studied the employers and when we were talking to the person who did the research he said you know this is an unusual thing because when i talk to the employers the more they learned about the proposal the stronger they supported it and the more their opposition declined so this is a national issue it's a national question we are working in the individual states and i must give credit here about 2008 or so i was sitting talking to mark and he said well you know i'm doing some work in california and i'm doing and washington state and various others and they what the hell are you doing that for we're working on the federal level and we're we're bound to win on the federal level why the states so when you really look at the father of the state plans he's sitting right here wearing a green tie we must continue the work and let me make one final point because i'm sure we want to get on and either discuss and or bring in the audience here justin has mentioned the whole question of asset building and retirement savings and this is not two issues this is the same thing at AARP we have this wonderful term we call economic resilience and economic resilience means that we know that people must save for the future and there's always something that's more important or more immediate but if you don't have the opportunity to save for the future whether it's through a state plan or through a national plan should there ever be one or when there is one excuse me this is a crucial element but we also know that there are going to be the inevitable bumps along the way and the bumps are going to be things like losing a job getting in an accident the roof leaking something along that line we need to have things structured in a way so that individuals can meet those needs and if we worry about leakage from retirement accounts which frankly i do one of the things we can do is to arrange it so that people can save perhaps both in a retirement plan and in a non-retirement plan so they can use that non-retirement plan first thank you david i don't want to belabor that point but i i have a jaw dropper for me after all these years in this the jaw dropper for me connecting those issues is that we talk about a lack of access in on the retirement saving side but 30 of americans don't have a savings account and so you know i've known that stat for years and i still have a hard time wrapping my head around it and it's a i think a critical point to recognize that we have one issue here that runs through so thank you so much for bringing that up senator bis there's a lot to chew on here i i want to dig in really quickly to this to this iris a question this is something that you guys wrestled really clearly and strongly within the law can you tell us sort of how you handled the question of whether this there would be iris a liability in in the secure choice plan and how you see that sort of looking forward i can but i'd rather tell you how i should have addressed it which is to give that speech that david gave about iris a i you know you know that you're i think this actually speaks you know to the point of the previous panel about how to build grassroots supporter on this issue i worry that you're in the bubble when someone gives a passionate series of comments about iris and you want to get up and start cheering and take your tie off and wave it around in the universal sign of those were good comments about iris a but anyhow we didn't have the benefit of that those prepared comments back when we were trying to pass the bill i think there is a genuine question about how to where in the where if anywhere in the iris a framework law as the illinois law is structured might fit and in addition to that being a genuine question it became a very significant political question as the opponents would claim that this was triggering all kinds of legal and potentially financial liability for employers and for the state and it became a political argument so the way that we wound up structuring the addressing the question in the law was to simply direct the board once it's created to send a letter of inquiry to the federal government and should the response come back that there is a iris a preemption that exposes the state or employers to liability the program will the implementation will halt until that matter is resolved and this is you know there's a very i think i think it's really important to separate the technical questions from the policy questions because they're both real and they sort of sound similar one is kind of technically under the current letter of the law as interpreted by the department of labor where does this sit and the other question is what is the appropriate mechanism in this new world of a state-created retirement scheme to provide the appropriate protections for workers and i think it's important that wherever we sit on the regarding iris so that we find a mechanism to have appropriate protections because otherwise you could be walking into a pretty pretty perilous world mark the administration takes this seriously it seems to me because there's language in the budget proposal this year that tries to address this question or at least at least starts to say hey we think these state plans uh have merit and should be investigated uh and and we ought to make it okay for for some experimentation to happen here just and yes it's not i wouldn't use the term investigated but we do think they have merit yes and you're right the labor department has a proposal in the budget portion of the administration's budget that relates to that department that proposes that congress authorize six and a half million dollars for distribution to several states to be selected as sites for pilot projects of the sort that Illinois and the various other states are about to do or are considering the thought is that with that legislation would come an express grant of authority to uh depart from whatever the otherwise applicable scope of irisa might be and to make clear that irisa might not apply at least fully or partially or in certain conditions to employer sponsored arrangements such as payroll deduction iras or others potentially this could include the sort of Illinois model or the other alternative models where the application of irisa might arise as a possible issue now the proposal does not say is not intended to take a position on whether irisa does or does not apply to existing models so one could view this proposal and i think should view this proposal as independent of the question would irisa apply to a payroll deduction automatic ira arrangement that involves automatic enrollment in iras that involves a requirement that employers that don't sponsor plans make their payroll systems available to their employees as a conduit for the employee to have an easier way to save his or her own wages in his or her own tax favored account so without prejudice to the legal issue that you and daniel have inverted to there's a proposal to provide funding and to provide explicit authority to depart from irisa for the purposes of experimenting if you will see whether to see whether it might be worth doing more legislatively regarding these plans now this is not to say that other legislative initiatives at the federal level might not be desirable or forthcoming but this is one step that the administration and the labor department which has as you know has the jurisdiction over whether irisa applies to particular arrangements have taken so far so maybe if they're members of the illinois congressional delegation listening to this conversation they they might be interested in introducing further legislation david how do we how do we start to the question of sort of state by state uh versus sort of a national plan uh and whether we reach a point where there is um there is sort of conflict there i mean you talked you touched on this a little bit already but but uh you know are we designing plans at the state level now that um uh can be part of a now a truly national framework oh absolutely yes how does that work well one of the beauties of what's going on in the state level is as angela pointed out that the plans are being designed to meet specific needs of individual states and individual uh jurisdictions and the like one of the things that we are seeing here the states are in a sense the laboratories of democracy so we are seeing the the development of different types of models and we're going to actually get to see how they work as we go along and as we get to the point that it's time for a federal solution on this it is not necessarily a federal solution that said that sweeps all of this away it's a federal solution that builds this and it may well be that what we find is that a particular model that some of us were kind of skeptical about really does work very well so that when we structure this the final national solution to this the national plan that in addition to the states we can actually expand out some of the features that we're finding in the uh the current process senator bis what what as you as you envision it or what happens now if uh the plan comes online in 2017 i'm a worker uh in chicago and i uh work and live in chicago and i have an employers that participates in the plan and then in 2019 i moved to indiana uh does what happens to me and my plan do we do we know uh yes we know um sort of um so first of all there you are you still exist your plan still exists it certainly is from a legal standpoint a Roth IRA like any other can be rolled over into a vehicle that you plan to use at your new employer the one thing that i would say is not crystal clear in the law but i think this by omission becomes reasonably clear is do you should you now move to indiana um and find yourself uh lacking at your new employer uh a retirement vehicle that you care to use may you continue on a non-automatic enrollment but sort of purely kind of voluntary active writing checks yourself periodically basis to contribute uh into the illinois secure choice account that has already been established in your name and already has assets in it the law is silent on that but i think by its silence it essentially authorizes the board to allow such a such an arrangement to move on and i would envision some people would conceivably do so mark one thing to add as a technical matter uh a Roth IRA uh is not something that can actually roll over to an employer plan under the current state of law as as daniel and david and i have discussed in the past we are uh uh considering uh proposing legislation we haven't worked this yet but we're thinking about uh whether legislation could be crafted to allow Roth IRAs to roll over tax-free into employer sponsored plans they can roll over to other uh IRAs but not employer plans at this point uh the reasons are ones i won't go into here but uh it is quite possible to conceive of a an appropriately framed piece of legislation that would allow that if we look at the existing 529 plans which are offered by the states there is the ability to contribute to a different states 529 you don't necessarily get the tax benefits from your home state if you do so but it still allows you to contribute into state and david i'm glad you mentioned the 529 model because that's really one of the things that we started with back in the mid 2000s and talking to california talking to washington illinois maryland other states connecticut that were starting to get interested at that stage they have 529s those are private sector run investment programs uh in those cases they state typically contracts with one uh investment firm but in the models that uh we've discussed with the states and that the states have gotten interested in uh there's the possibility of following the federal automatic ira approach and having many private sector players provide the investments provide the iras so that is but but the 529 model continues to be something that i know many of the states look to as a kind of analogy to what might be done here even if the investment arrangements might be more pluralistic with respect to private sector investments or might be different in some other way if you look at the debate on 529s way back when a lot of the arguments that are being made about today you could verbatim take them from the debate on 529s the concerns about the competition what would happen in the marketplace taking business away from from other from financial firms and savings plans um and we see where we are now with 529s i mean they're thriving you look at the billions of assets that are now saved in these plans around the country uh and that i think generally most people would think we're better off because of it and in its development quite frankly again sort of federal and state as the momentum was building with the states and the experimentation there were tax issues that needed to be resolved as the momentum built the federal government addressed those tax issues and the floodgates opened and 529s were able to spread throughout the country so uh historically 529s are a great model to look at and how they developed and and of course where we are today and how they're managed we are really close to our witching era but i don't want to leave the audience out of this uh we have a microphone again if uh folks have questions for our panel we would uh we would we would welcome them hi i'm christen johnson from the organ state treasury's office um hello and i just wanted to i should start off by saying thank you to everybody on the panel without all of you as particularly angela we would not be as far in our process as we are um my question is actually for mark um the irony that we're facing right now is that some of our opponents are saying we don't need to support a plan because the myrae exists um is can you speak a little bit to the fifteen thousand dollar cap and whether you think that will ever um you know be raised at all well the myrae is not intended to compete with anything uh the myrae is intended as these other efforts are to uh make it easier for working people in this country to save and in particular it's sensitive to not competing with existing arrangements such as private sector offerings be they 401ks or iras uh nor is it intended to supplant uh state uh initiatives uh much less the the federal automatic ira uh proposal so it is intended to do what it can in the here and now in uh a context that's administrative doesn't require any legislation uh to encourage people to save with a very safe principle protected no downside investment uh not the only way to invest not the only way to save and certainly even that investment is only provided here as you say for people up to a fifteen thousand dollar level because the thought is that that's a an incubator again a way to get people comfortable who haven't saved before and who might be concerned about market risk David another thing to think about in describing this is that myrae is very important myrae is a tool it's not a solution what you're talking about in Oregon what the states are talking about what Illinois is doing that's a solution and that's really what's going to be in the long term needed we don't have any current plans to change the fifteen thousand dollar a limit it's really it was set at that level in large part because we wanted this to be a transitional arrangement something that would just incubate the very small accounts and then have them turn over into the the regular market that most of us uh saving well there are another sort of a longish comment we'll go ahead hi um i want to maybe combine two questions into one that i think they're related um two issues that i think um are important are cost and consolidation and you all sort of address both of them a little bit and i'm just wondering if any of you could talk about thoughts going forward into better ways to address costs especially for what are likely to be small balance accounts um and then also the issue of consolidation which affects cost and again important for accounts with smaller balances and people who may move around the workplace uh more often that's those are great questions and i think they are closely related uh senator bis let's if you would would you respond to that and and also maybe transition into sort of closing thoughts and comments from you for sure thank you for sure um so i think first of all is a matter of legislative design that that's why i'll actually frame all this both both the answer and my closing thoughts under the same umbrella which i think has sort of been hanging over us through both panels and almost never been explicitly mentioned which is the extraordinary value in thinking through this set of policy questions and even more importantly the set of tactical and political questions of the healthcare analogy which is i think it's just very present in this room so you can view what the what we've done in illinois as a kind of a kind of a individual mandate with a public option essentially and i think the the challenge associated with cost and the need for scale as one of the key tools to drive down cost is a reason why it's important not to give up that public option and that that is the tool that we've utilized in illinois to bring down cost um it also becomes a tool to address consolidation as you to use the word differently consolidate more people into a single program the risk of fragmentation as people move from employer to employer decreases significantly but beyond that i think the only two we have at our disposal in illinois on the consolidation question is one of education and really kind of aggressive communication it's a tricky problem without any obvious solution in the current fragmented market i want to close by saying a little bit more about the healthcare analogy because i i think we find ourselves in kind of a free harris wafford moment if you will if you think back to the moment in 1991 when uh senator hines of pennsylvania died suddenly and was replaced by harris wafford who then shortly after had to stand for a special election and was expected by most to lose was way behind and hit upon with a team of political consultants you may have heard of people like paul baghalla um hit upon in their polling the realization that if they talked about the creation of a health insurance option for all pennsylvania workers that totally transformed the nature of the campaign use that message to win that election and then of course the people who worked for him on of having a significant role in the 1992 presidential election which put this issue on the national agenda um though of course then took another 20 years to achieve national law which is maybe a dangerous data point as well i think we're sitting in that moment before 1991 where the issue is real the problem is deep the public anxiety is there and the political spark that creates a flame hasn't somehow quite been lit and we're as we enter frankly a presidential election right hope that somebody running for uh for president is able to to tap into that public anxiety and elevate this issue to the kind of top top top of the national agenda that i think will eventually be necessary in order for us to eventually pass national legislation in the meantime as we wait uh hopefully for that to happen before long the action taken by the states is enormously positive first of all because we can help literally millions of people who live in the states that we work in but also because it moves that agenda forward and then if you if you think about the type of shape that a national solution may eventually take particularly if you take this analogy seriously and imagine the creation of some kind of national mandate with partnerships with states to um to execute it any work that states will have done in advance of that will not be in competition with national legislation but will actually be literally a part of the implementation eventually of national legislation and so i think that as we just in closing it's it's really exciting for me to have a chance to come out of Illinois and talk with uh people working in washington dc and elsewhere in the country on this issue because i think if we handle ourselves properly there's an opportunity that before too long the efforts that are taking place in a few different states can spread to become a part of a national effort that eventually could be i would hope a true national solution for what is a very very deep problem so thank you again for including me thank you so much let me say thanks to our audience both in the room and online i would be remiss if i didn't mention that we have a a paper we've published today with our analysis of the law in Illinois and some of the some of the issues of implementation and design that that remain to be addressed that's available on our website assets.newamerica.org would you please join me in thanking both of our incredible panels here today