Private employers have shifted quickly from opt-in to opt-out retirement programs, but Illinois is the first state to set up such a system for residents.
I’m embarrassed to say I totally missed this, and had to find out via the New York Times’s Josh Barro, because it’s right in my wheelhouse:
Starting in 2017, most [Illinois] state residents with jobs who don’t already have a retirement plan at work will be automatically enrolled in individual retirement accounts, funded through a 3 percent deduction from their paychecks.
Daniel Biss—the Illinois state rep senator and MIT Ph.D.—was the lead sponsor of the legislation, and Governor Quinn just signed it into law this Sunday, making Illinois the first state in the nation to implement an automatic, opt-out retirement-savings plan. And it’s an idea with something of a Chicago pedigree, as the publication of Cass Sunstein and Richard Thaler’s influential Nudge gave opt-out programs a boost at the political level.
Having an automatic deduction of three percent from your paycheck might initially give you a bit of the big-brother willies at first. It’s voluntary, but it’s voluntary opt-out, not voluntary opt-in, which has been the standard for most of the history of 401(k) and programs of the like.
CLICK HERE to read the entire Chicago Mag article.