HARRISBURG — Legislation creating a new retirement savings program that advanced through the Pennsylvania House saw Democrats accusing Republicans of opposing a bill that seemed tailored for their support.
House Bill 577 introduced by State Rep. Kyle Mullins, D-Lackawanna, would create the Keystone Saves program — an individual retirement account (IRA) program administered by the Pennsylvania Treasury for workers whose employers don’t offer a retirement savings plan.
The Pew Charitable Trusts and Pennsylvania Treasurer Stacy Garrity, a Republican, support the proposal. They raised alarms earlier this year based on a Pew-funded study that found that Pennsylvanians’ lack of retirement savings risks a near $18 billion fiscal cliff for the commonwealth by 2035 due to increased spending on social services combined with lost tax.
The House cast a 106-95 vote advancing the bill to the state Senate. Five Republicans joined all 101 members of the Democratic Caucus in support.
More than 2 million Pennsylvania workers would be eligible for the program, according to Mullins. He said his bill largely mirrors one offered in the 2021-22 session by a former Republican House member, Tracy Pennycuick, who was since elected to the state Senate. That bill received no further consideration after being assigned to the Commerce Committee in February 2022.
“If this plan got any more Republican-friendly I’m not sure I’d be allowed back in the Democratic Caucus room,” Mullins said during floor debate Wednesday.
Under the bill’s current terms, employees would be automatically enrolled for payroll deductions with the ability to opt out. The default contribution rate is 4% of gross wages. The maximum is 10% or the annual maximum contribution limit set by the Internal Revenue Code, whichever is greater.
Employers with five or more workers, those open for business longer than 15 consecutive months and those that haven’t offered a tax-favored retirement plan in the preceding three years would be required to participate.
There is no penalty in the bill for employers who do not register and participate in the program.
Rep. Marla Brown, R-Lawrence, called Keystone Saves an “unnecessary mandate.” She noted fierce opposition by the National Federation of Independent Business. According to the group, 84% of its members oppose the program.
“Managers and owners of businesses are going to have to become financial advisors under this legislation,” Brown said.
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