Want a state program to manage your retirement savings? State treasurer pitches plan in Decatur

July 25--DECATUR -- Illinois Treasurer Michael Frerichs during a stop Tuesday in Decatur underscored the need to address a rapidly growing problem he said many are embarrassed to discuss -- the retirement crisis.

"The simple fact is, we do not help these people save, and they don't save, then it's going to be our problem because they will access state services earlier," Frerichs told the Herald & Review editorial board. "We should care about our fellow human beings, regardless, but if we just care about our self-interest, then helping people save money is in our best interest.

He was in Decatur to promote Illinois Secure Choice, a program that lets workers at companies that don't have an automatic retirement plan like a 401(k) or pension take advantage of one administered by the state. It will automatically deduct money from the paychecks of about 1.2 million Illinois residents for retirement savings.

Frerichs was also in town to present a $21,000 gift to the Good Samaritan Inn. The money, from the state's charitable trust stabilization fund, will be used to provide food and job training opportunities to those in need.

Frerichs, a Democrat, also is running for his second term as treasurer. He is opposed on the November ballot by Republican Jim Dodge and Libertarian Mike Leheney.

The Northwestern Mutual's Planning & Progress Study released in May showed that 21 percent of Americans have no savings for retirement and a third of Americans have less than $5,000.

Secure Choice started payroll deductions this month and will expand in steps through the end of next year. It applies to certain businesses with 25 or more employees.

The Illinois program will be self-sustaining, with Frerichs saying the cost of operating it will come from those who take part, not the taxpayer who has his or her own retirement plan or one already through an employer.

Frerichs said he understood where people may be hesitant to trust the state with their money, given the financial woes and a budget stalemate that lasted longer than two years. He reiterated several times that a private financial service firm, Pennsylvania-based Ascensus, would manage the investments. The company is the same that oversees a similar statewide retirement plan in Oregon.

The state will act instead as an administrator, and will collect a "small fee'" to cover the cost of the program, Frerichs said.

"We're not trying to compete with the private sector, we're filling a need," he said. "If you do not like state government making sure you help provide retirement for your employees, that's fine. Set up your own program and you do not have to (go through the state program). If you're an employer with more than 25 employees and you already have a 401K or a pension, then this doesn't affect you."

Eight employers have applied to take part in the pilot program, from the Chicago area to Mount Vernon in southern Illinois. The closest to Decatur are in Springfield and Bloomington-Normal.

Denise Geske, co-owner of Fox and Hounds Hair Studio and Day Spa in downtown Bloomington, told The Pantagraph last week she was thrilled to get involved in the pilot. Of the 44 employees there eligible for the program, 32 have not opted out.

Frerichs said 90 percent participation is the state's goal.

"I like to say the most powerful force in the universe is inertia, and once you set something in motion, it tends to continue," he said. "Once you enroll and its automatically deducted, most people don't touch it. If you have to actually go and start something moving, if you have to find a financial adviser and chose from 50 different investment options and write and mail a check every month ... people will find every excuse not to do that."

Contact Ryan Voyles at (217) 421-7985. Follow him on Twitter: @RVVoyles

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