Democrats propose Iowa retirement savings plan

Legislation aimed at bolstering the retirement savings of private-sector Iowa workers is being proposed by a pair of Iowa Democratic politicians.

State Treasurer Michael Fitzgerald and state Sen. Nate Boulton of Des Moines are seeking support for Senate File 2088, which would create Retirement Savings Iowa through private-sector employers. The state treasurer's office would serve as the trustee.

The proposal would require all businesses that do not currently provide a retirement savings plan to give employees the opportunity to automatically invest a portion of their paycheck in a Roth IRA. Employees would determine the amount they would like to contribute and they would opt out at any time, Fitzgerald said. Under current federal regulations, employers would not be allowed to contribute to the account.

"Retirement Savings Iowa is a responsible, low-cost way for the state to address a looming retirement crisis," Fitzgerald said.

He cited data published by AARP in 2015 which showed 511,000 private-sector employees in Iowa do not have access to an employer-sponsored retirement plan.

Boulton, who is seeking the Democratic Party nomination for governor, said the retirement savings measure would help working Iowa families in their pursuit of future economic security. He spoke at a news conference with Fitzgerald Wednesday at the Iowa Capitol.

Eight states have similar private-sector retirement savings programs, but the Iowa Legislature has rejected similar proposals in the past. Fitzgerald said the proposal would require about $500,000 in a state appropriation for start-up costs.

Iowa Senate President Jack Whitver, R-Ankeny, expressed doubt Wednesday when asked about prospects for the retirement savings legislation.

"I think generally most people feel the private sector is filling that void fine, and anything that doesn’t add an additional $500,000 of spending at this time would probably be a good thing," Whitver said.

Boulton is also proposing Senate File 2087, which would instruct Iowa Workforce Development to look into a portable benefits program for nontraditional workers and independent contractors. These workers are usually ineligible for health care and other employment-related benefits. He suggested the measure would help address the state's shortage of skilled workers.

"The new economy is an on-demand economy, a gig economy," Boulton said. "Gig economy workers could work in the technology field or maybe they are drivers for companies like Lyft and Uber."