Gov. Bruce Rauner said private employers shouldn’t be forced to take part in a state-sponsored retirement plan for employees, but Illinois Treasurer Michael Frerichs is working to override the governor’s veto of the legislation.
Rauner changed a bill lawmakers sent him to alter language in the state’s Secure Choice Savings Program. The program will eventually require all employers with more than 25 employees to send the state a portion of their employees’ pay for an individual savings program. Employers wouldn’t have to match, but Rauner said he doesn’t like the mandate.
“That’s not good policy,” Rauner said. “You don’t force cost on small employers. I want people to have good retirement but you don’t do it by forcing small business to be uncompetitive and have to leave the state.”
Frerichs said it won’t cost businesses extra to tweak the withholding they’re already doing for their employees.
If Rauner’s changes to the 2015 law stick, Frerichs said it “would change the program dramatically, but we don’t intend for the governor’s amendatory veto to stand.” The program is important, he said, to get an estimated 1.2 million employees to start saving for retirement.
“Because this is cleanup legislation that would make this good program better, we’re going to take that case to the Legislature and override the governor’s veto,” Frerichs said.
House Bill 4923 passed unanimously in both the House and Senate.
Lawmakers will return after the November election for veto session.
National Federation of Independent Business Illinois State Director Mark Grant applauded the governor’s move to not make the program mandatory.
“The government has failed miserably at running its own state pension system and here they are trying to mandate on businesses how to do theirs,” Grant said.
Grant said there are already plenty of savings options available, and small business owners who operate such brokerages.
“The law itself, the way it’s set up, competes with small businesses already in the marketplace providing these kinds of programs,” Grant said.
Frerichs couldn’t say what penalties would be in place for employers who don’t comply with the mandate. He said that is still being worked out through the Joint Commission on Administrative Rules.
Secure Choice for Illinois is in a pilot phase with volunteers taking part. Wave 1 mandating employers with 500 or more employees will be required to enroll in November. By July 2019, Wave 2 will require employers of 100 or more to enroll. Wave 3 in November of 2018 will require employers with 25 or more employees to enroll.
