Pennsylvania & Retirement Security
Treasurer Joe Torsella and Pennsylvania Retirement Security Task Force
What We See and What We’re Doing
Under the leadership of Treasurer Joe Torsella, in 2017 the state of Pennsylvania undertook a bipartisan Private Sector Retirement Security Retirement Task Force effort to study retirement security in the state. The Task Force met throughout 2018 collecting information from a range of experts, ultimately issuing its Report and Recommendations. A key finding: the current retirement savings shortfall will cost the state more than $15 billion over the next 15 years. We caught up with Treasurer Torsella this past week to chat about retirement, and more.
Treasurer Torsella, you’ve been active in retirement security for some time – what are you seeing that has you so motivated?
Well, I’ll start with what had me originally motivated. My mother, Pat worked for more than three decades as a nurse and educator. First as a school nurse, and then in a state hospital, she took care of the developmentally disabled and provided comfort and support for their families. She worked hard, eventually getting her doctoral degree, and came back to teach to a new generation of caregivers at a state university.
That hard work earned her the relative security of a stable pension. While hers may be the last generation with widespread pension security, it shouldn’t be the last with stable retirement security.
What has me motivated now is seeing so much progress on the issue here in Pennsylvania. We’ve partnered with elected officials from across the aisle on the work for an auto-IRA program. In government, it’s easy to try to slap the label “bipartisan” on something, but what we’ve seen here is an area where we can find real, earnest common ground from both sides.
The questions here really come down to: “Should Pennsylvanians be able to retire with dignity?” and if so, “Should we make it as easy as possible for them to build those retirement savings?”
It turns out there are a lot of people willing to say “yes” to both of those, and who are ready to support a plan that is simple, low-cost, and doesn’t need to be rolled over every time an employee moves to a new job.
Can you tell us a little about your recent work?
I am constantly amazed and energized by the many ways in which state treasurers can contribute to the broader public good and help individuals at the same time.
During the pandemic my staff has worked heroically to make sure the obvious gets done: we are processing—on time and while working from our homes—an incredible volume of unemployment payments to hundreds of thousands of Pennsylvanians and we are coordinating with the rest of the executive branch to expedite essential health system purchases and address cash flow challenges resulting from the extreme contraction of our economy.
But we’re also responding by doing the unusual: we created an innovative facility to help hospitals keep down financing costs associated with variable rate debt obligations, put together an agreement with national banks to create more flexible and compassionate policies regarding the cashing of stimulus checks to individuals, and partnered with our water infrastructure financing authority to make operating capital immediately available to rural health care facilities while they await federal funding, insuring that they remain open and able to continue to be reliable customers for drinking and waste water facilities.
And, of course, I’m very heartened about the positive responses we have received for our retirement security initiative.
The Task Force I brought together emerged from hearings with a strong consensus in favor of government’s role in helping private employers offer an automatic enrollment IRA. Our pioneering economic study that brought hard quantification to the fiscal impacts of financially insecure seniors has become a model for other states, and we recently sharpened our understanding of the problem using an even more granular analysis of key financial data.
How is the pandemic affecting your thinking and your current course of action?
The first, and most important, thing for me is that the pandemic has once again thrown into bold relief the fragile economic security of so many, many Americans. Thought experiments about how many of our neighbors could survive a sudden $400 emergency have become real world experiences as we witness friends and co-workers waiting in terrifying lines at food banks and pantries and seeking relief from mortgage and rent payments.
I became Treasurer of Pennsylvania to help strengthen that economic security, and the pandemic has only intensified my commitment to do so.
The retirement savings initiative we have launched here is now more important than ever – we must help people save for the inevitable rainy days, whether those arrive when they retire and no longer have regular salaries or hit tomorrow, when extraordinary times stretch their resources in unimaginable ways.
I know saving for retirement will be harder than ever now, as people lose jobs and incur debt in the struggle to make ends meet during this challenging time. My goal is to put in place a privately based, but state-facilitated, auto-IRA program that makes it as inexpensive and convenient as possible to save for retirement when individuals return to work. I hope that encourages many to start putting away a nest egg for their later years as soon as they can.
It would be easy – and a mistake – to say we should put this issue away for a later day.
What do you see next for yourself and Pennsylvania?
I’ll give you the most honest answer I have for both of those, which is that I’m just not sure.
I’ve been blessed to have had a lot of great jobs in my career, and this is still the best one that I’ve ever had. Not a day goes by where I don’t feel that I’ve made a meaningful difference somewhere for someone. The job has also changed a lot over the past four years. We’ve gone from making the changes that needed to be made in the first few months to really seeing how effective it can be when the department stands up for Pennsylvanians, and against financial abuses and corruption. We’ve put in place a statewide program, Keystone Scholars, that jump starts education savings for every family that has a new child in Pennsylvania.
And we have the excitement of progress on issues like retirement security. We were pleased to see bi-partisan bills proposing an Auto-IRA program for Pennsylvania introduced into the General Assembly shortly before the pandemic became everyone’s primary focus.
Our team is already beginning to consider ways in which that approach might be strengthened by incorporating opportunities for individuals to also save for true short-term cash emergencies.
It’s clear that there will always be tension between immediate and long-term financial security, and I want to be sure any Pennsylvania solution that emerges helps people to find a smart and appropriate balance. Being Treasurer is a lot of things, but it’s never boring.
For Pennsylvania, we have a lot of futures we can choose from. We have had a long history of unstable pairings between revenues and expenditures, and that was before the current crisis. We have long-term weights around our necks, like the rising costs for healthcare and higher ed. Most troublingly, we have huge pressures on the social cohesion of our society, nationally, and here in our Commonwealth.
In the coming months, we will have a lot of people who want to return to “normal.” While that’s understandable, we should remember that normal is what got us here. I’d like to – and hope we will –choose something better, where we embrace the challenge of actually solving some of these problems, and to re-knit the social fabric that has held us together for so long. That idea of working to build a true community – what we in Pennsylvania call a “Commonwealth” – is the pole star that will lead both me and Pennsylvania to the right next step, and the best future.
Our thanks to Treasurer Joe Torsella and to his team, including Deputy Treasurer Keith Welks, for their thoughtful work and ongoing effort in this space.
This piece was featured in May 21, 2020 edition of Retirement Security Matters. For more fresh thinking on retirement savings innovation, check out the newsletter here.
