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Keystone State Nudging Toward State-Run Plan


A bill that would establish a state-run retirement plan to provide coverage for employees whose private-sector employers do not is working its way through the Pennsylvania legislature. 

The Commerce Committee of the House of Representatives on May 3 voted in favor of HB 577 in a 12-8, party-line vote. Rep. Kyle Mullins (D-Lackawanna County) introduced the measure on March 20. 

What the Bill Would Do


HB 577 would establish the Keystone Saves Program, which would be an automatic enrollment payroll deduction IRA retirement savings program. It also would create the Keystone Saves Program Fund, the Keystone Saves Administrative Fund and the Keystone Saves Program Advisory Board. The bill further addresses the powers and duties of the state Treasury Department in relation to the program, including investment and fiduciary responsibilities and  implementation.

The legislation is not going to replace employees’ ability “to find more options to invest in their retirement, but it will start them on a path to learning more about saving for retirement,” said Mullins in the May 1 Commerce Committee hearing before it voted on his bill. 

Employees. A covered employee would be automatically enrolled unless he or she opts out of the program. Regular deductions would be taken from a participant's gross wages and put into the participant's program account.

Investments. Participating employees also could select one or more investment options from the investment options offered through the program. Further, they could change the selected investment option or options at any time. 

Deductions from a participant's gross wages will be invested in a default option established by the Treasury Department for the program if a participant does not select any investment option.

Contribution rates. The default payroll deduction rate would be 4% of gross wages. The bill also provides that there would be an automatic increase of the deduction equal to 1% of annual gross wages, up to a maximum of 10%. 

However, participants would be able to:

  • select the rate of payroll deduction; 
  • increase or decrease the deduction; and 
  • freeze the automatic increase in the annual deduction rate. 

The Board. The Keystone Saves Program Advisory Board, which would be part of the Treasury Department, would be composed of the following members:

  • the Governor, or a designee;
  • the State Treasurer, or a designee;
  • four members, who would serve a term of four years, one each appointed by: 
    • the President pro tempore of the Senate;
    • the Speaker of the House of Representatives;
    • the Minority Leader of the Senate; and 
    • the Minority Leader of the House of Representatives. 

The State Treasurer, or a designee, shall serve as chairperson of the board.

Expanding participation. The bill would require the Board to promulgate rules to expand employer participation beyond those the measure covers. Specifically, rules: 

  • by which employers who are not covered employers to voluntarily participate in the program; and 
  • that would allow independent contractors, self-employed individuals and other employees who are not covered employees to voluntarily participate in the program. 

An employer that maintains or contributes to a specified tax-favored retirement plan for its employees within the current or three preceding calendar years would not be eligible to participate in the program.

Phased registration. The measure would phase in registration by covered employers: 

  • employers with 100 or more employees: no later than two years after the effective date; 
  • employers with 20-99 employees: no later than 30 months after the effective date; 
  • employers with 10-19 employees: no later than three years after the effective date; and 
  • employers with 5-9 employees: no later than four years after the effective date. 

Starting Date. HB 577 provides that no later than 24 months from the effective date of the measure after it is enacted, the Treasury Department would be required to begin implementing the program and allow a participating employer to register with it and certify that it has facilitated a qualified arrangement. 

However, the bill also provides that the department may delay the start of implementation for up to one year if it determines that doing so would be in the best interests of the program.

ARA View


Andrew Remo, Director of Federal and State Legislative Affairs for the American Retirement Association, said of the bill, “The ARA applauds the Commerce Committee for moving the Keystone Saves Program forward to the floor of the Pennsylvania House of Representatives.”

Remo continued, “Data shows that private sector retirement plan adoption rates increase in states that have fully implemented an auto-IRA program with a retirement plan coverage requirement like the Keystone Saves Program. The Keystone Saves Program will complement, not compete, with the private sector and ARA urges its prompt enactment into law.”

A First Step


“We’ve been discussing this issue since 2017 in Pennsylvania,” said Mullins at the hearing. “Today, I’m asking you to move this idea to the next level,” he continued, adding, “This is just the first step of this legislation, and it’s a critical one that shows our support for working Pennsylvanians as they head toward their retirement.”