Illinois Secure Choice: Two Years Young

Treasurer Michael Frerichs, welcome! You've been an early leader in the retirement security space. Why is this so important to you?

I think we can all relate to the idea that financial worries cause stress and uncertainty. I know I feel great stress when I'm financially uncertain.

Secure Choice won't solve everything, but it gives people a chance to start saving for their future. It's easy for workers, and it's easy for employers. That's how government should work. For me, it's important to support something that can help relieve some of the anxiety that comes from financial insecurity and financial uncertainty. I think that's a no-brainer.

I was very excited that I got to support this legislation as a state Senator and then had opportunity to implement it as Treasurer -- and at the time, I thought that was unique. But then apparently there’s this guy from Oregon – we’re looking at your Treasurer Tobias Read -- who actually sponsored the legislation and then implemented the program, so I guess I’m in good company.

#welldone. Illinois Secure Choice is now two years young. What sort of impact are you seeing?

I'll start first with some numbers. In just a little over two years, we have roughly 82,000 savers who've put away approximately $50 million toward their retirement. We have over 6,000 registered employers based in every county in the state, and that number continues to grow. My team sees these employer and saver numbers, and they’re very encouraged. We've been told by some employers that, and this makes me very happy, “this is the best state program they've ever been a part of,” which means we're doing our job right.

We hear it from Illinois workers too. There’s a family-owned salon in central Illinois, not far from where I live and grew up. A worker there told us he didn't think that he would ever have access to a retirement plan, that this type of thing was just for white collar workers. But now he has his own account and feels excited about his ability to save.

As someone who grew up in a blue-collar household, that just makes me smile.

Very cool.

Right? There's a restaurant in Chicago that my team loves. An employee there shared with us that after he started with Secure Choice, he felt relieved to know he was setting money aside for his future. He reminded us that for him and for many others, he would wake up in the morning, worried about bills and finances and money. But with his Secure Choice account, he had a new sense of relief knowing that he's saving and he has money set aside, if he needs it.

He shared that story at a press conference recently. Someone asked him what Secure Choice meant for him. He said, Just today I was on the L and I was thinking about how I was drowning in red ink and all these debts. And then I realized, Oh, I've got this money set aside that offsets the debt. I may be in the black now, for the first time ever. He said, that just felt so good to me. He doesn't have a ton of money. But he feels like his head is above water now.

And I'm going to say for those out there who think, “Well, this isn't going to help people save enough for their retirement,” we think it can – and even for people's mental health, this has been helpful to a lot of people.

You have the best stories.

I’ll give you just one more. One of our first facilitating employers started in the pilot program because a new employee asked if they had any kind of 401(k) or retirement option. This is a restaurant; they didn't offer one. Her manager explained, “that's not a common benefit offered in our industry.” Just a few weeks later, that manager saw information about Illinois Secure Choice and reached out to see if they could be part of the pilot. That was exciting for me because it showed there was an appetite out there. It wasn't just government pushing something on people; they were hungry for it and were excited to take part.

That is fabulous. Speaking of restaurants, we know the pandemic has been a big disruptor for everybody. What adjustments have you had to make along the way?

Well, we know that our Secure Choice employers and our Secure Choice savers are the very employers and workers being hardest hit by the pandemic. That's your retail shops and restaurants, your bars, and much more.

Over the last year, we've worked closely with our employers who have needed to pause their registration or payroll due to temporarily closing. We’ve provided more hands-on support, and interestingly we see that the number of facilitating employers continues to rise, despite everything.

A lot of folks have lost work – what are you seeing there.

For savers, we wanted them to know the money in their accounts is their money and it's accessible if they need it. For them we've provided notices and expanded the number of languages enabled on our website. We’ve provided accessible trainings through our program services team. If workers needed the money, we wanted them to know they could take it out. It's one benefit of saving in a Roth IRA.

It's also important to note that this program has grown every single month throughout the pandemic. Even with some employers needing to delay, we have added new employers and savers every month. To me, this is a sign of how important this program is and how much people want to be a part of it. It really could have gone otherwise.

No kidding. Tough times. You've got some program priorities for the coming year. Tell us what's important to you.

Given what we are seeing, our biggest priority is expanding the program. We have proven that it works, that it's easy and that our employers and workers want it. Currently Secure Choice only covers employers with 25 or more employees. We want to lower that threshold to allow all our small businesses and workers to have access. Illinois was the first state to pass enacting legislation, so it's not surprising that our threshold would be higher than other states. Now that we know how well the program works, it just makes sense to give access to everyone.

Apart from that legislative goal, we are focused on working with our existing pool of employers, helping them all get registered and up and running. We’ve had some natural slowdowns due to this pandemic. Our goal is as we come out of it is to make sure that everyone who should have an option to save for retirement at the workplace, where the paycheck happens, does. And to do a great job of supporting our employers along the way.

We will note, Illinois was also the first state to complete their statewide program rollout. What insights would you share with states that are considering starting similar programs?

That's true. Let me start off with the one that I just mentioned, start with the lower employee threshold. These programs work, and if you want to give people access, to help close the gap, we should cover everyone we can.

Two, focus on making things simple and easy for employers. There's going to be reluctance when something is new. We focused on this at the beginning, and we continue to find ways to simplify the process.

Also, you're going to be really excited about your program, but give it time to grow. You’ll want to ramp up quickly, but take the time you need to make sure your program launch goes well. First impressions are very important.

And just remember that it will take some time to get everything up and running, and to scale. It took our 529 college savings program 20 years to get to $15 billion in assets. We need to remember these programs are in their infancy, but they will absolutely grow.

That is terrific. Thank you. We have one more question. It's our fun question for 2021. What is the one thing you'd love to do when we come back out of lockdown?

This is your toughest question! It might sound like a political answer, but I really miss doing in-state visits around Illinois. It's something I did frequently before the pandemic and I’m looking forward to starting again. When I say, I can't wait to get out and do my job, people roll their eyes and say, “of course you want to do your job”. But it’s true.

I have tried to be good because it's what the CDC recommends. I've tried to stay home, to have a small bubble of family that I see. And I look forward to going back out amongst the rest of “my” people.

Once you get around Illinois, what’s next?

You’ll like this -- I look forward to seeing some national parks with my 12 year old daughter. Last summer we had been cooped up for a while and I said to her, “Okay, we're taking a road trip.” We have traveled together a lot, but we had never done a long road trip together. We spent 40 hours driving in the car. We went around the upper Midwest and out to Colorado. We went hiking in the Rockies. She got above the tree line for the first time – she got to throw snowballs in July because we were up so high. And it was a great time together.

We decided that, lockdown or not, we're going to get out outdoors again this summer. We might go a little farther north up into the Dakotas, Montana, maybe even Idaho. I don't know if we'll make it to Oregon, but we'll do another big road trip this summer and that's something I'm very much looking forward to.

That will be awesome. Well, it sounds like time with Ella is part of your pandemic silver lining.

It is. Most parents I talk to say, Wow, the great thing about this period is that I'm home more! I spend more time with my children. We have more meals together than ever before. And yes, when we’re together I try to find healthy ways to occupy our time and it's been fun.

We love it. Thank you so much Treasurer! We really appreciate the chance to talk to you. If you’d like to connect directly with Treasurer Michael Frerichs, you can reach him here. You can connect with Illinois Secure Choice here and follow the Treasurer’s work and adventures here.

This piece was featured in the February 25, 2021 edition of Retirement Security Matters. For more fresh thinking on retirement savings innovation, check out the newsletter here.