Seattle Mayor Proposes City-Run Plan for Private Sector Workers
Seattle workers whose employers do not offer a retirement plan will have access to one through the city if a proposal
by Mayor Jenny Durkan (D) is enacted.
On Oct. 10, then-Mayor Tim Burgess (D) had sent legislation
to the Seattle City Council to establish the Seattle Retirement Savings Plan (SRSP). The proposal is intended to provide coverage for the 40% of Seattle workers overall, and 68% of Seattle employees of small businesses, that lack access to a retirement plan through their employer.
The 2018 budget proposal Durkan has unveiled includes a provision that would establish the SRSP, a program that would:
- be comparable to a defined contribution through which employees contribute to their own separate account and are responsible for selecting investments from professionally-managed product options available in the SRSP;
- automatically enroll eligible employees in the plan, and allow them to opt out or stop participating at any time;
- initially assign employees a default investment product that is appropriate for their age and corresponding risk profile, such as a low-fee target date mutual fund;
- allow employees to determine how their accounts are invested by choosing from a menu of investment products offered by financial firms that have been screened and selected by a Seattle Retirement Savings Plan Board, which would be formed if the City Council adopts the SRPS plan;
- allow employees to increase their retirement savings through additional contributions and investment performance;
- allow accounts to be portable and remain with the worker if they change employers; and
- require employers to perform a limited administrative function by processing payments of eligible employees to the third-party private administrator through their existing payroll system.
Durkan proposes that the city conduct a market feasibility and legal analysis to determine how best to proceed. Her office envisions that the SRSP would entail one-time start-up costs and would require ongoing expenditures as well. It also proposes that a small administrative fee be automatically deducted from each employee account, which it says would make the SRSP self-sustaining after an initial period.
The proposal states that the city is not responsible for the performance of investments employees select by from the menu the SRSP Board establishes.