In an effort to private-sector workers lacking access to employer-sponsored retirement plans, the New York City Comptroller has created a report based on research from The New York City Retirement Security Study Group (RSSG) detailing a public marketplace for retirement plans.
“The NYC Nest Egg: A Plan for Addressing Retirement Security in New York City,” is comprised of key marketplace plans and features designed for those in short of an employer-sponsored savings plan. For employers who do not offer plans, the Nest Egg has formed a voluntary NYC 401(k) Marketplace including a plethora of Employee Retirement Income Security Act (ERISA) protected, employer-sponsored 401(k) plans, such as the publicly-sponsored Empire City 401(k) Multiple Employer Plan (MEP) for those worrisome of ERISA fiduciary responsibilities and paperwork, as well as potential SEP-IRA and SIMPLE-IRA plans.
Employers who already offer established plans are encouraged to continue doing so. Those who do not select a plan through the NYC 401(k) Marketplace can automatically default into a new NYC Roth IRA. However, employees are free to opt out of the plan at any point.
In addition to these plans, employers and workers will have access to features including myRA, a taxpayer-subsidized federal retirement savings option allowing accumulations of up to $15,000 without fees or risk of principle loss; two policy options for guaranteed lifetime income after retirement; and low-cost investment vehicles, among other features.
According to the report, a publicly-enabled independent governance board will supervise the Nest Egg, and be responsible for sponsoring the Empire City 401(k) MEP. Additionally, the board will select and oversee private providers acting as fiduciaries, handling investments and executing administrative duties.
The Nest Egg was formed after the U.S. Department of Labor (DOL) proposed a series of rules for guidance on state-run pans for the private sector. In August, the DOL issued a final rule allowing states to propose and manage payroll deduction individual retirement account (IRA) savings programs with automatic enrollment for private sector workers. In addition, states will be able to operate these plans without establishing a pension plan under ERISA.
Recently, studies have measured the scope of NYC private sector workers who lack retirement savings. A report conducted by The New School’s Schwartz Center for Economic Policy Analysis found that out of 2.5 million private sector workers, 58% did not have coverage or were ineligible for a pension, 401(k) or other employer-sponsored retirement plan.
More details about the Nest Egg can be found here.