District Of Columbia 2023-2024 Regular Session

District Of Columbia Council Bill B25-0434 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	COUNCIL OF THE DISTRICT OF COLUMBIA
2	2	The John A. Wilson Building
3	3	1350 Pennsylvania Avenue, NW
4	4	Washington, D.C. 20004
5	5
6	6	1
7	7
8	8	Statement of Introduction
9	9	Automatic Retirement Savings Act of 2023
10	10	July 14, 2023
11	11
12	12
13	13	Today, along with Councilmembers Vincent C. Gray, Charles Allen, Matthew Frumin, Brooke
14	14	Pinto, and Brianne K. Nadeau, I am introducing the Automatic Retirement Savings Act of 2023.
15	15	This legislation would establish a Retirement Savings Board which would manage a universally
16	16	available and voluntary Retirement Savings Program for employees of private businesses who
17	17	are not offered a retirement plan through their workplace and for certain self-employed
18	18	individuals. Employees would have 3% of their earnings automatically deducted from their
19	19	wages to contribute to the program, unless they make an election to not contribute or to
20	20	contribute a different amount. The program is designed to serve the employees of the small
21	21	businesses who are unable to offer retirement savings accounts to employees due to the cost and
22	22	administrative burden of maintaining them. These accounts would also be portable if a
23	23	participating employee changes jobs, because the accounts would be managed by the District,
24	24	not the employer.
25	25	In 2017, the District was ranked the 10
26	26	th
27	27	worst area to retire in the United States, attributable to
28	28	the high costs of health care and housing in the region.
29	29	1
30	30	According to the National Institute on
31	31	Retirement Security, 56% of Americans are not confident in their ability to achieve a financially
32	32	secure retirement, and 68% do not think that the average worker can save enough on their own to
33	33	guarantee a secure retirement.
34	34	2
35	35	Over time, a decreasing share of the workforce has had access to
36	36	an employer-sponsored retirement plan or a defined benefit pension, and defined contribution
37	37	individual accounts rely on the employee’s initiative and offer lower savings and protections.
38	38	3
39	39
40	40	Social Security’s benefits decline over time relative to increases in the cost of living. These
41	41	issues are amplified for Black and Latino workers, whose wages and retirement savings have
42	42	historically been depressed compared to those of white workers.
43	43	4
44	44
45	45	States like California, Oregon, Illinois, and Connecticut have implemented automatic income
46	46	retirement account savings programs, and the programs in those 4 states have accumulated $630
47	47	million in assets to date. A state-managed retirement program can increase participation from
48	48	individuals who have historically lacked the structure and access to retirement savings programs
49	49	that, over time, can build meaningful savings. Approximately 173,000 employees in the District
50	50
51	51	1
52	52	District ranked 10
53	53	th
54	54	worst place to retire, WTOP News, 2016.
55	55	2
56	56	Retirement Insecurity 2021. National Institute on Retirement Security.
57	57	3
58	58	Ibid.
59	59	4
60	60	Studies Spotlight Racial, Ethnic Gaps in Retirement Savings, AARP, 2022.
61	61	Christina Henderson Committee Member
62	62	Councilmember, At-Large Hospital and Health Equity
63	63	Chairperson, Committee on Health Judiciary and Public Safety
64	64	Transportation and the Environment
65	65	COUNCIL OF THE DISTRICT OF COLUMBIA
66	66	The John A. Wilson Building
67	67	1350 Pennsylvania Avenue, NW
68	68	Washington, D.C. 20004
69	69
70	70	2
71	71	do not have access to a retirement savings account through their employer. That number will
72	72	continue to grow as more small businesses establish themselves in the city. A savings plan
73	73	facilitated by the District would help alleviate the barriers that prevent employees whose
74	74	employers do not offer long-term retirement savings options from saving for their future
75	75	retirement.
76	76
77	77	A District-sponsored savings plan, funded by employees and managed by the Retirement Savings
78	78	Board, is one response to the long-standing and increasingly urgent concerns about retiree’s
79	79	financial security. Seniors today find Social Security alone insufficient to cover their costs.
80	80	5
81	81	It is
82	82	estimated that 37% of retirees do not have any retirement savings. As the cost of living increases
83	83	over time, supplementing Social Security income with retirement savings will be crucial for
84	84	workers to retire with dignity and financial security. Lack of adequate savings could force some
85	85	retirees to try and re-enter the workforce or rely on family for support. This legislation will
86	86	enable individuals to plan for their retirement and create a stronger, more resilient economy by
87	87	having a source of income to help pay for living expenses and health care, among other things.
88	88
89	89	I look forward to working with my colleagues to advance this bill and work together to ensure
90	90	that every District resident can plan for a more secure financial future.
91	91
92	92
93	93
94	94
95	95	5
96	96	Half of single seniors can’t pay for the basics. Here’s why Social Security’s not enough, CNBC, 2020.
97	97	_______________________________ _______________________________ 1
98	98	Councilmember Vincent C. Gray Councilmember Christina Henderson 2
99	99	3
100	100	4
101	101	_______________________________ _______________________________ 5
102	102	Councilmember Charles Allen Councilmember Matthew Frumin 6
103	103	7
104	104	8
105	105	_______________________________ _______________________________ 9
106	106	Councilmember Brooke Pinto Councilmember Brianne K. Nadeau 10
107	107	11
108	108	12
109	109	13
110	110	14
111	111	A BILL 15
112	112	16
113	113	_______________ 17
114	114	18
115	115	IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 19
116	116	20
117	117	_______________________ 21
118	118	22
119	119	To establish a Retirement Savings Board, and to establish a universally available and voluntary 23
120	120	Retirement Savings Program for employees of private entities and certain self-employed 24
121	121	individuals who are not offered a retirement plan through their workplace. 25
122	122	26
123	123	BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act 27
124	124	may be cited as the “Automatic Retirement Savings Act of 2023”. 28
125	125	Sec. 2. Definitions. 29
126	126	For the purposes of this act, the term: 30
127	127	(1) “Board” means the Retirement Savings Board established pursuant to section 3. 31
128	128	(2) “Covered employee” shall mean an individual who is 18 years of age or older, 32
129	129	who is employed by a covered employer in the District or self- employed, and is not an employee 33
130	130	of the federal government, the District government or any independent agency or instrumentality of 34
131	131	the District government, or any employer that maintains an employee sponsored retirement plan. 35 2
132	132
133	133	(3) “Employer” or “covered employer” shall have the same meaning as in section 2 36
134	134	of An Act To provide for the payment and collection of wages in the District of Columbia, 37
135	135	approved August 3, 1956 (70 Stat. 976; D.C. Official Code § 32-1302) and shall conform with the 38
136	136	following; 39
137	137	(A) Who is headquartered in the District; 40
138	138	(B) Employs no fewer than 5 covered employees; 41
139	139	(C) Has employed no fewer than 5 such employees without interruption for 42
140	140	the previous calendar year; 43
141	141	(D) Has been in continuous operation for at least 2 years; and 44
142	142	(E) Has not offered or maintained a retirement plan in the preceding 2 years. 45
143	143	(5) “Participant” means a covered employee enrolled in the retirement savings 46
144	144	program. 47
145	145	(6) “Retirement plan” means; 48
146	146	(A) A qualified retirement plan under section 401(a) of the Internal Revenue 49
147	147	Code, section 403(b), section 408(k), or section 408(p) of the Internal Revenue Code (I.R.C. §§ 50
148	148	401 (a), 403(b), 408 (k), 408 (p)); or 51
149	149	(B) A savings incentive match plan for employees of small employers, a 52
150	150	simplified employee pension, a salary reduction simplified employee pension, or a payroll 53
151	151	deduction IRA. 54
152	152	(7) “Program” mean the Retirement Savings Program established pursuant to section 55
153	153	4. 56
154	154	Sec. 3. Establishment of the Retirement Savings Board. 57 3
155	155
156	156	(a) There is established, as an independent agency of the government of the District of 58
157	157	Columbia, a board of trustees to be known as the Retirement Savings Board, which shall have 59
158	158	exclusive authority and discretion (subject to the requirements of this act) to manage, administer, 60
159	159	implement, and control the Program established by this act. 61
160	160	(b) The Board shall consist of the following 7 members: 62
161	161	(1) The Chief Financial Officer or their designee; 63
162	162	(2) The Commissioner of the Department of Insurance, Securities and Banking or 64
163	163	their designee; 65
164	164	(3) The Director of the Department of Small and Local Business Development or 66
165	165	their designee; 67
166	166	(4) The Executive Director of the Workforce Investment Council or their designee; 68
167	167	and 69
168	168	(5) Three public members appointed by the Mayor as follows: 70
169	169	(A) One public member who owns a business in the District; and 71
170	170	(B) Two public members with experience in providing financial advice or 72
171	171	assistance to lower- to moderate-income workers or retirees; 73
172	172	(c) A public member’s initial term shall be for 4 years. 74
173	173	(d) A vacancy on the Board shall be filled in the same manner that the original appointment 75
174	174	was made. Any person appointed to fill a vacancy shall serve for the unexpired term of the original 76
175	175	appointment. 77
176	176	(e) No member of the Board shall be appointed to serve more than 2 consecutive 4-year 78
177	177	terms of office. 79
178	178	(f) The chairperson of the Board shall be selected from among the public members. 80 4
179	179
180	180	(g) Each member of the Board shall have one vote. The powers of the Board shall be 81
181	181	exercised by a majority of members present at a meeting of the Board, whether in person or 82
182	182	remotely. Four members shall constitute the necessary quorum to convene a meeting of the Board 83
183	183	and to act on any measure before it. 84
184	184	(h) The Board shall meet at a minimum of 4 times annually. 85
185	185	(i) The chairperson or the Chief Financial Officer is authorized to call and set the agenda for 86
186	186	special meetings of the Board. 87
187	187	(j) Subject to applicable federal and District law, the Board, in consultation with the Office of 88
188	188	Tax and Revenue, shall establish, design, develop, implement, maintain, and oversee the Program in 89
189	189	accordance with best practices for retirement saving vehicles. The Board shall have power to adopt 90
190	190	reasonable and proper rules and regulations necessary to implement the provisions of this chapter. 91
191	191	(k) The Board shall, through employer and employee outreach, marketing or education 92
192	192	initiatives, or publication of online resources, encourage participation, retirement saving, and sound 93
193	193	investment practices. 94
194	194	(l) The Board shall provide or make available information regarding the Program, including its 95
195	195	applicability and registration requirements, with emphasis on participation eligibility and the ability of 96
196	196	employers at any time to sponsor a specified tax-favored retirement plan that would exempt them 97
197	197	from covered employer status. 98
198	198	Sec. 4. Retirement Savings Program. 99
199	199	(a) There is established the Retirement Savings Program, which shall be designed and operated 100
200	200	by the Board in a manner that will cause it not to constitute an employee benefit plan with the 101
201	201	meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, approved 102
202	202	September 2, 1974 (88 Stat. 832; 29 U.S.C. § 1001a(3)). 103 5
203	203
204	204	(b) The Program shall have such features as the Board in its discretion may adopt, subject to 104
205	205	applicable federal law, and shall: 105
206	206	(1) Provide each participant with an account within the Program, to which covered 106
207	207	employers shall remit the participant employee’s contributions within 30 days of the end of the month 107
208	208	in which the participant would have otherwise received the contributions in cash; 108
209	209	(2) Allow covered employees to open a retirement savings account established under 109
210	210	the Program through payroll deduction or any other method of contribution established by the Board; 110
211	211	(3) Require all participating employers to offer covered employees the opportunity to 111
212	212	contribute to accounts established by the Program through payroll deduction or any other method of 112
213	213	contribution established by the Board; 113
214	214	(4) Provide for the automatic enrollment of covered employees and allow such 114
215	215	employees to opt out of the Program; 115
216	216	(5) Set a default contribution rate of 3 percent of a covered employee’s wages, subject 116
217	217	to any increase or decrease of such a rate authorized by the Board; 117
218	218	(6) Permit a participant to change their contribution rate to be a percent of their wages 118
219	219	or a lump sum, which the individual may later change; 119
220	220	(7) Include a process for withdrawals by, and disbursement to, participants and provide 120
221	221	options for such withdrawals and disbursements, including lump-sum or periodic payments; 121
222	222	(8) Take measures to protect the confidentiality of account and participant information; 122
223	223	(9) Maintain separate records and accounting for each account; 123
224	224	(10) Report on the status of accounts to participants no less than once per year or upon 124
225	225	request by the participant; 125 6
226	226
227	227	(11) Allow participants who have become ineligible to participate in the Program to 126
228	228	maintain or withdraw account balances or roll over such balances into other retirement accounts, 127
229	229	subject to federal law; 128
230	230	(12) Allow participants to terminate participation in the Program and maintain or 129
231	231	withdraw account balances or roll over such balances into other retirement accounts, subject to federal 130
232	232	law; and 131
233	233	(13) Allocate administrative fees to the retirement savings accounts in the Program. 132
234	234	Sec. 5. Participating employer obligations. 133
235	235	(a) A covered employer shall enroll each of its covered employees in the Program by a date 134
236	236	to be determined by the Board, provided that, the covered employee provide notice that they do not 135
237	237	wish to participate in the program. 136
238	238	(b) A participating employer shall remit funds deducted from the earnings of each 137
239	239	participant for deposit in the retirement savings program within 30 days of the end of the month in 138
240	240	which the employee would have otherwise received the contributions in cash. 139
241	241	Sec. 6. Information and disclaimers to covered employees and participants. 140
242	242	(a) In addition to any other information or disclaimers that the Board deems appropriate, the 141
243	243	Board shall make available to covered employees and covered employers the following information 142
244	244	in plain language: 143
245	245	(1) The benefits and risks associated with enrolling in the Program; 144
246	246	(2) Procedures regarding contributing to the Program and opting out; 145
247	247	(3) Procedures regarding increasing or decreasing the rate or amount of contribution; 146
248	248	(4) Options and processes for withdrawing account balances; 147
249	249	(5) Procedures regarding obtaining additional information about the Program; 148 7
250	250
251	251	(6) Procedures regarding filing complaints about non-compliance by covered 149
252	252	employers or other concerns about the Program; 150
253	253	(7) Information regarding the ability of covered employees and participants to seek 151
254	254	financial advice concerning retirement savings from financial advisers, tax advisers or other 152
255	255	qualified individuals; 153
256	256	(8) Fund profiles, including fees, for each of the available investment options; and 154
257	257	(9) The following disclaimers: 155
258	258	(A) Participating employers, the Board and its members, the Office of Tax 156
259	259	and Revenue, or the District government are not authorized to provide financial advice; 157
260	260	(B) The Program is not an employee benefit plan under the Employee 158
261	261	Retirement Income Security Act of 1974, approved September 2, 1974 (88 Stat. 832; 29 U.S.C. § 159
262	262	1001 et seq.); 160
263	263	(C) Participating employers, the Board and its members, the Office of Tax 161
264	264	and Revenue, and the District government are not liable for any loss incurred by a participant from 162
265	265	investing in the Program; 163
266	266	(D) Participating employers, the Board and its members, the Office of Tax 164
267	267	and Revenue, or the District government will not monitor and are not obligated to monitor a 165
268	268	participant employee’s eligibility under federal law to make contributions to an IRA; and 166
269	269	(E) Neither the program, the principal investments, any return on investment 167
270	270	nor any interest rate is guaranteed by the Program. 168
271	271	Sec. 7. Participating employer record retention. 169
272	272	Each participating employer shall retain annual records documenting such employer’s 170
273	273	compliance with the requirements of this act for a period of 3 years. 171 8
274	274
275	275	Sec. 8. Compliance. 172
276	276	(a) The Board shall have exclusive authority to ensure compliance with and enforce this act or 173
277	277	any regulation promulgated under this act. 174
278	278	(b) The Board shall establish a process for the submission of covered employee and participant 175
279	279	complaints concerning a covered employer’s alleged failure to comply with the provisions of this act. 176
280	280	All complaints concerning a covered employer’s compliance with this act received by any other 177
281	281	District agency shall be referred to the Board. The Board may, with or without a complaint, monitor 178
282	282	the status of covered employers’ compliance with this act, including through review of available data 179
283	283	and documents. 180
284	284	(c) If the Board determines that a covered employer is not in compliance with the provisions of 181
285	285	this act, the Board shall issue a notice to the employer outlining the nature and extent of the alleged 182
286	286	noncompliance, provide instructions for compliance, and specify the potential administrative penalties 183
287	287	for noncompliance. 184
288	288	(d) If the employer does not come into compliance within 90 days of the date the notice was 185
289	289	issued, the Board, in its discretion, may initiate enforcement proceedings; except, that the Board shall 186
290	290	not initiate enforcement proceedings against a covered employer until one year after the effective date 187
291	291	of this act. 188
292	292	(e) The Board may, in a final order, impose administrative penalties against a covered 189
293	293	employer who fails to comply with this chapter, or any regulation promulgated under this chapter, 190
294	294	which shall not exceed $250 per employee per year, up to a maximum total penalty of $5,000 per 191
295	295	year. 192
296	296	(f) The Board’s decision may be appealed by the covered employer within 15 days of the 193
297	297	issuance of the decision. 194 9
298	298
299	299	(g) The Board shall respond to the appeal within 15 days of receiving the appeal. 195
300	300	Sec. 9. Fiscal impact statement. 196
301	301	The Council adopts the fiscal impact statement in the committee report as the fiscal impact 197
302	302	statement required by section 4a of the General Legislative Procedures Act of 1975, approved 198
303	303	October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1-301.47a). 199
304	304	Sec. 10. Effective date. 200
305	305	This act shall take effect after approval by the Mayor (or in the event of veto by the Mayor, 201
306	306	action by the Council to override the veto), a 30-day period of congressional review as provided in 202
307	307	section 602(c)(1) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 203
308	308	Stat. 813; D.C. Official Code § 1-206.02(c)(1)), and publication in the District of Columbia 204
309	309	Register. 205