In 2015, Illinois became the first state to enact a state-mandated and state-operated retirement system for private sector employers: The Illinois Secure Choice Savings Program Act. The Illinois program resembles a system approved by the California legislature—a system that has not yet been enacted since it is conditioned on an additional vote by the legislature. Illinois’ program and the one proposed in California have notable differences in that (1) the Illinois retirement accounts will qualify as individual retirement accounts (“IRAs”) under the Internal Revenue Code (“Code”); (2) the Illinois IRAs will be Roth IRAs; (3) the California program requires participation by firms with five or more employees, rather than twenty-five or more as mandated by the Illinois law; (4) the Illinois law accepts the status of its private sector retirement plan as governed by the Employee Retirement Income Security Act (“ERISA”), as long as both Illinois employers and the state incur no liability from that status; and (5) the Illinois law does not provide procedures by which employers may supplement employees’ contributions to the state-mandated fund. While the Illinois law will pass legal muster under both ERISA and the Code, it is less clear that its arrangement is sound as a matter of policy. Furthermore, there is great irony in the fact that the legislatures of two states that have failed to properly fund the pensions of their public employees instead choose to address the private sector’s retirement challenges. Nevertheless, the Illinois law is superior to the law proposed in California, and it may result in improved private sector savings. This Article acknowledges the widespread concern that workers are not saving enough for retirement and notes that the Illinois law provides an important first contribution to attempts at remedying the retirement savings problem through a state-mandated program. This Article further encourages widespread experimentation among the states to determine which policies—if any—effectively encourage retirement savings.
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