In an effort to allow the estimated 1.5 million private Wisconsin workers that have no access to pension plans through their employers to set aside fund for retirement, Democratic lawmakers are calling for a feasibility study to determine the cost and benefits of creating a pension management plan for such workers.
Senate Bill 611, authored by Sen. Dave Hansen, D-Green Bay, and Rep. Eric Genrich, D-Green Bay, was introduced during the Senate session Tuesday and has been referred to the Senate Committee on Workforce Development, Forestry, Mining and Revenue.
California recently put a similar plan in place.
The feasibility study called for in the bill will look at providing a basic pension plan that is similar to the pension plan offered to state workers through the Wisconsin Retirement System. The goal is to provide a low-cost, defined benefit option to employers and their workers in the private sector who currently do not have access to their own plan, or whose plan is insufficient to help with their retirement security.
Hansen said the private worker pension plan proposal is needed to head off a “retirement crisis,” the result of an aging population that has inadequate retirement savings.
“This is as important an issue as any we’ve talked about so far this year in the legislature,” Hansen said at a Capitol press conference Wednesday, surrounded by AARP members and democratic supporters. “We are here to talk about the retirement crisis. And that crisis is here.”
The average Social Security payment in Wisconsin is roughly $1,100 a month for women and $1,500 a month for men, according to AARP Wisconsin. For more than half of the state’s Social Security beneficiaries over 65, these amounts represent 50 percent or more of their family income.
Nationally, half of all Americans 65 and older live on $18,000 a year or less.
“Too many people do not have an adequate long-term plan for their financial security,” said Helen Marks Dicks, state issues advocacy director for AARP Wisconsin, in a statement. “That’s why a basic pension is so important.”
Milwaukee resident Ilana Cohn-Gomez, 25, is among the 1.5 million state residents who does not have access to a retirement plan through her employers. She works in a bar and a salon.
She said at Wednesday’s press conference that she is among the 275,000 state residents employed in the hospitality industry, many of whom do not have employer-sponsored retirement accounts.
Since opening Fired Up Pottery in Madison in 2005, owner Kim Stanfill-McMillan’s business has grown to include 17 employees. None of them have retirement plans, she said.
“This bill would give them a place to put their money and it stays in one place (even if you switch jobs),” she said.
Jim Lamont, 73, is retired with money saved through a 401K account. A volunteer advocated for AARP, he said his retirement account tanked during the recession.
“A steady stream of income would have been welcome,” Lamont said. “Those with pension plans were less anxious about the economy.”