By Justin Lynch
On a fall morning in 2011, Daniel Biss, a State Senator in Illinois, was listening to a lobbyist give a self-aggrandizing presentation about his work in the State Capitol. But one “accomplishment” on this lobbyist’s list—killing an automatic IRA savings bill which would have automatically enrolled those without a retirement account—stood out.
When the lobbyist completed his remarks, Biss pulled him aside and asked him for the number of the bill the lobbyist had squelched. “Now, he probably wishes he hadn’t [done that],” Biss said at a recent New America event recounting how the Illinois bill became a law. A revised version of that bill, sponsored by Biss, recently became an Illinois state law set to take effect in June of 2015.
If you’re not quite sure what an automatic IRA means, don’t worry. Biss is a former mathematics professor whose specialty is translating complicated policies into more easily-digestible chunks that are accessible enough for you to understand, but also leave no doubt that he is whip-smart. Educating lawmakers was—and still is—a process, said Sam Tuttle, Director of Policy and Advocacy at the Heartland Alliance and one of Biss’s allies. “It was important because people need time to get their heads around this.”
The core of the automatic IRA is that it gives more people a better chance to save for retirement by providing them access to a retirement plan if their employer doesn’t offer one and asking them to opt out rather than requiring them to seek out and enroll in a plan entirely on their own. Providing access and making enrollment automatic, as the bill championed by Biss and his coalition will do, seems like a small solution, but it makes a big difference. It’s one of the spillovers of Nudge: Improving Decisions About Health, Wealth, and Happiness, a popular book which shows how government can use small changes in policy to be more effective.
Right now, only about half of American households own a retirement account, said fellow panelist Justin King, Policy Director in the Asset Building Program at New America. “Accumulating savings is important because savings becomes wealth and wealth becomes opportunity.”
After going through some of the basics of the legislation, the panelists entered a lengthy discussion of how the bill actually became a law. The conversation offered a crucial behind-the-scenes perspective and potential lessons for other states looking to adopt similar legislation.
What began as a small, dedicated coalition fighting for the bill soon expanded when the group conducted research that showed it wasn’t just a Chicago issue or a rural issue. It was an issue state-wide. “We found that in every single legislative district, over half of the private sector workers didn’t have this type of access,” said Courtney Eccles, Policy Director at the Woodstock Institute. “That’s when we were able to say to every single policy maker in Illinois ‘This is a problem, and it’s a problem in your district.’”