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