Proposed Federal Rule Could Help Illinois’ New State-Run Retirement Program

John Gregory -- Illinois Radio Network

A new proposed federal rule would help Illinois' new state-based retirement program.

U.S. Secretary of Labor Thomas Perez announced the new rule in Chicago Monday, pointing to Illinois' Secure Choice Savings Program, as a potential model for other states to set up individual-run retirement accounts with automatic enrollment.

Perez says the rule sets guidelines for how states can implement these programs while staying within federal laws.

"If you have auto-enrollment, which is a key feature of the Illinois plan, a worker would have an opportunity to opt out, should he or she choose to do so," Perez said.

Perez says President Obama has tried to address the problem of too many workers not saving for retirement by proposing similar programs at the federal level. He blames the lack of progress on Congress.

Illinois' program is set to be up and running by June 2017. Employers with at least 25 employees who don't offer a retirement plan of their own will be required to participate, with 3 percent of an employee's paycheck being deducted and put into an IRA.