City Controller Alan Butkovitz released a report on June 6 that outlines a plan for the City of Philadelphia to help the 60 percent of businesses who currently do not offer retirement benefits for its employees, according to a press release.
As Philadelphia faces a looming retirement security crisis, the City Controller urges city leaders to adopt an Open Multi-Employer Plan (Open MEP), which is a publicly-sponsored 401K-type retirement plan that businesses could voluntarily join. This plan would offer small businesses a simple, low-cost, low-maintenance savings plan for their employees.
“I urge City Council to aggressively adopt legislation that would establish this type of retirement plan,” said Butkovitz, who lost the Democratic nomination for reelection in May. “It could help hundreds of thousands of Philadelphians retire with financial independence.”
The Controller’s report included the findings from a survey distributed to more than 200 local small businesses. In addition to 60 percent of businesses indicating that they do not offer a plan, some of the other findings included the following:
•82 percent of Accommodation and Food Service small businesses lack retirement plans for their employees.
•76 percent of small businesses surveyed with revenues under $1 million do not offer a retirement plan.
•Businesses that have been in operation for less than five years are less likely to offer retirement benefits than those in business longer.
•92 percent of businesses said they would support a city-sponsored retirement plan if it were voluntary, such as an Open MEP.
“Expanding savings programs to small businesses gives employees an accessible retirement investment tool that could alleviate the cost of public assistance for the state and municipality,” said Butkovitz.
According to Butkovitz, the recent actions by Congress to reverse the U.S. Department of Labor’s ruling that would allow states to create retirement programs have now made it critically important for local governments to take action.
“The federal government has made it even more difficult for private businesses and their workers to prepare for retirement,” said Butkovitz.
In addition to working with the local business community, the Controller’s Office has been working with AARP PA to ascertain the best practices for future retirees.
According to Bill Johnston-Walsh, AARP PA State Director, the City Controller’s Office has highlighted an important issue for the future of the city.
“This report demonstrates the critical need to offer Philadelphians a way to save for retirement,” said Johnston-Walsh.
“With 60 percent of Philadelphia businesses that currently do not offer retirement savings plans, large numbers of Philadelphia residents will face a financial crisis as they approach retirement age. Workers are significantly more likely to save if offered a retirement savings plan at work and this report demonstrates the critical need to offer Philadelphians a way to save for their future,” said Johnston-Walsh.
“We need to ensure that our businesses are equipped with the necessary tools to provide Philadelphians with the ability to save for their future,” said Butkovitz. “The future of our economy will depend on the retirement security of those working and living in Philadelphia.”