Today, the Pennsylvania Treasury’s Private Sector Retirement Security Task Force issued its report on the financial challenges facing future retirees and insufficient savings. PA AFL-CIO Secretary-Treasurer Frank Snyder was proud to join State Treasurer Joe Torsella and his fellow task force members in the Capitol to introduce the report.
Below is an excerpt of the Report’s Executive Summary:
Large numbers of Pennsylvanians are seriously unprepared for the financial challenges of retirement, and their insufficient savings will have consequences for both their own lives and for our Commonwealth. Lack
of retirement savings would add on average nearly $1 billion in costs annually to the state’s already strained General Fund budget. While this situation is not unique to Pennsylvania, the demographics of our aging state
mean greater fiscal consequences for Pennsylvania than for many other states.
The lack of access to a retirement savings plan for individuals at their places of employment is a particularly damaging contributor to this state of affairs. In fact, it may be the single factor most clearly related to lack of savings activity. National statistics reveal that more than three-quarters of employees who are offered retirement plans at their jobs elect to participate. This level of participation in financial preparation for retirement is roughly fifteen times greater than that exhibited by workers who cannot save through their workplaces.
Unfortunately, more than 2.1 million Pennsylvanians work for employers that do not offer retirement plans. Although a number of these employees labor for small firms, there is a significant – and surprising – concentration of workers without plans in medium and large firms. More than 500,000 are in companies with
50 to 499 employees; another 703,000 work for businesses with 500 or more employees.
The Commonwealth faces a number of other aggravating factors that are likely to intensify the significance of this level of unavailability of workplace options. For one thing, it attracts (and retains) senior citizens – it has the fifth highest percentage of population over 65 in the United States. As the Baby Boomer generation continues to age, Pennsylvania faces a large increase in the total senior population. It also has higher than national average costs for housing and health care, increasing the burden of those essential needs on fixed income individuals.
As retirees find themselves financially unprepared to maintain a minimum quality of life,
Pennsylvania Treasurer Joe Torsella convened the bipartisan Retirement Task Force of knowledgeable and interested government, private and non-governmental leaders to consider implications of significant numbers of financially unprepared individuals living their retirement years in Pennsylvania. Over the course of four hearings, the Retirement Task Force heard testimony from retirement experts, traditional economists, behavioral economists, employers, financial advisors, a legal specialist, and other experts regarding the nature and scope of the looming problem. The Retirement Task Force also heard from officials from other jurisdictions, who described a number of innovative approaches to increase retirement savings activity by workers that have been authorized by state legislatures and are now being implemented.