NYS Secure Choice Savings Program Act (A.4982-A/S.4344-A)
MEMORANDUM IN OPPOSITION
Unshackle Upstate, a non-partisan, pro-taxpayer, pro-economic growth, education and advocacy coalition made up of business and trade organizations from all parts of Upstate New York, strongly opposes this legislation.
This legislation would create a state-administered ‘Secure Choice’ retirement savings program for the benefit of private sector employees who do not otherwise have access to such a program. It would also put in place an administrative board responsible that would be responsible for the program.
We are concerned that this plan will be more expensive than lawmakers anticipate, and that state taxpayers could ultimately be required to make up the difference. To our initial point, it is not clear what this program will cost. According to the sponsor’s memorandum in support of the bill, its fiscal implications are “to be determined.” So the sponsors have not made any effort to determine what the program’s start up and ongoing administrative costs will be.
In addition to the potential fiscal risks to state taxpayers, we are also concerned that the creation of this program may effectively “crowd out” other existing employer-provided benefits. Some employers who offer 401(k) plans — which come with administrative and regulatory costs — to eliminate that employee benefit and instead sign their workers up for the Secure Choice program. A large shift of participants from existing private retirement products into a state-sponsored retirement program could result in job losses.
Last year, Gov. Cuomo announced the formation of the SMART (“Saving More to Achieve Richer Tomorrows”) Commission, which he directed to “partner with state agencies, financial services professionals, consumer advocates, and academics to study available options for the creation of a state-administered retirement savings program for workers whose employers do not offer a retirement plan.” This SMART Commission has begun holding meetings, presumably in an effort to address some of the concerns that we and others have raised.
Rather than approving this bill at this time, we instead urge lawmakers to wait until the Governor’s SMART Commission issues its report, so that light can be shed on some of the unanswered issues that we identify above.
For these reasons, Unshackle Upstate opposes the enactment of this legislation.