Illinois Asset Building Group - Building Financially Strong Families and Communities

In December 2009, IABG co-sponsored a webinar on the topic of Universal Voluntary Retirement Accounts (UVRA). Over 100 attendees from across the country listened to national experts-including Dean Baker, Co-Director, Center for Economic and Policy Research, Ted Boettner, Executive Director, West Virginia Center on Budget and Policy, Gary Burris, Senior Policy Associate, Economic Opportunity Institute, Madge Bush, Director of Advocacy, AARP-Virginia, Olivia Calderon, California Legislative Director of the Asset Building Program, New America Foundation, and David John, Principal, The Retirement Security Project-discuss the current issues surrounding the U.S. retirement savings framework, workers’ preparedness for retirement, and the data supporting the need for a UVRA program.

UVRAs are an innovative proposal that can bridge the current retirement savings gap among low to moderate income workers. UVRAs are publicly administered, defined contribution plans for workers who lack access to an employer-sponsored retirement plan. Under a UVRA program, employers that do not currently sponsor a retirement plan would be required to offer their workers the opportunity to enroll in an UVRA and make regular payroll deductions to their UVRA account. Government administration of UVRAs would provide bargaining power and economics of scale to achieve lower administrative costs for workers. It can also overcome the barriers that prevent many small businesses from offering retirement plans to their employees. Moreover, UVRA accounts would be portable thereby allowing employees to continue making contributions despite changes in their employment.

Advocates and lawmakers have already proposed the creation of UVRA programs at both the federal and state levels. On the state level last year, California introduced legislation which would establish the California Employee Savings Program and offer Individual Retirement Accounts (IRAs) for individuals. Similarly, in Connecticut, two bills were introduced proposing UVRAs and Rhode Island introduced resolutions to create a special legislative commission to study the establishment of UVRAs. Virginia proposed a bill for retirement plans that would be open to qualified small employers with 50 people or less. Last year, a bill in Washington was proposed to establish employer-sponsored UVRA plans and employee IRAs, and West Virginia’s State Treasurer offered to use funds from unclaimed property to finance the West Virginia Voluntary Employee Retirement Accounts Program.

On the federal level, President Barack Obama’s budget blueprint included proposals for an automatic IRA plan for workers with an opt-out option and an expansion of the Saver’s Credit. The Automatic IRA proposal would pursue universal retirement savings coverage by allowing employees not covered by qualified retirement plans to save for retirement through automatic payroll deposit IRAs.

IABG’s co-chair, the Sargent Shriver National Center on Poverty Law (Shriver Center), has prepared a paper on the benefits of UVRAs which was published in the November/December 2009 issue of the Clearinghouse Review Journal of Poverty Law and Policy. In the upcoming year, IABG proposes to discuss the concept of UVRAs with Illinois advocates, small business owners, chambers of commerce, and community groups to generate interest in the concept and determine whether Illinois should adopt legislation similar to that proposed by other states. On March 4, 2010, IABG members Karen Harris and Kate Flannery, Shriver Center attorneys, and Dory Rand, President of the Woodstock Institute, will discuss UVRAs and how they pertain to women in the work force at the Chicago Bar Association’s Joint Task Force of Women meeting.