Philadelphia voters have approved a ballot measure establishing the Philadelphia Retirement Savings Program (“PhillySaves”), a first‑of‑its‑kind city‑run retirement savings program for private‑sector workers who lack access to employer‑sponsored retirement plans. The measure represents a significant expansion of retirement‑savings policy at the municipal level and introduces new compliance considerations for covered employers.
First Municipal Auto‑IRA Program in the United States
PhillySaves is designed to address the retirement savings gap for an estimated 200,000+ private‑sector workers in Philadelphia who do not currently have access to workplace retirement benefits.
The program operates as an automatic individual retirement account (auto‑IRA) system, similar to programs adopted at the state level but notable as the first program implemented at the city level in the United States.
Under the program:
- Eligible employees will be automatically enrolled in a retirement account;
- Contributions will be made through payroll deductions; and
- Employees will have the ability to opt out or adjust contribution levels at any time.
Employer Coverage and Obligations
PhillySaves applies broadly to private employers operating in Philadelphia, particularly those that:
- Have been in business for at least two years, and
- Do not sponsor a qualified retirement plan (such as a 401(k), pension, or similar tax‑qualified arrangement).
Covered employers will not be required to fund employee retirement contributions but will be required to:
- Facilitate payroll deductions for enrolled employees;
- Enroll eligible employees into the program; and
- Coordinate with the program’s administrative systems and governing board.
Employers that maintain a qualifying retirement plan are exempt from the program.
Contribution Structure and Employee Participation
The program will establish a default contribution rate, expected to begin between 3% and 6% of employee wages, with the possibility of gradual increases over time up to a capped percentage.
Key features include:
- Contributions deposited into individual retirement accounts (IRAs);
- Employee choice between traditional and Roth IRA structures; and
- Portability, allowing accounts to follow employees across jobs.
Importantly, employer contributions are not permitted, reinforcing that the program is employee‑funded but employer‑facilitated.
Governance and Implementation Timeline
Approval of the ballot measure enables the creation of a Philadelphia Retirement Savings Board, which will oversee implementation, select program administrators, and establish operational rules.
While the program is now authorized, implementation will occur in phases:
- The program is expected to begin rolling out in advance of July 1, 2027, with contributions commencing on or after that date.
Employer Impact and Compliance Considerations
Although PhillySaves does not impose direct financial contribution requirements, it introduces new administrative obligations for employers, particularly those that do not currently offer retirement benefits. Employers may need to:
- Modify payroll systems to accommodate automatic enrollment and deductions;
- Establish procedures for employee notices, opt‑outs, and contribution changes;
- Coordinate with the program’s governing body and administrators; and
- Evaluate whether adopting a qualified retirement plan may be preferable to participation.
The program is likely to have its greatest impact on small and mid‑size employers, which are less likely to already offer retirement benefits and may face new operational burdens.
Broader Policy Context
PhillySaves reflects a growing national trend toward state‑facilitated retirement savings programs, now extended to the municipal level. While more than 15 states have implemented similar initiatives, Philadelphia’s program represents the first localized effort to require employer facilitation of retirement savings.
Employer Takeaway
The approval of PhillySaves marks a significant shift in employer responsibilities at the local level. Employers operating in Philadelphia should begin evaluating whether they are covered, assessing the administrative impact of participation, and considering long‑term retirement benefit strategies ahead of the expected 2027 rollout.