Woodstock Institute Theory of Change, Wealth Creation and Preservation

This article illustrates how Woodstock’s Theory of Change model applies to its work in the area of wealth creation and preservation.  The specific example used here is Woodstock’s work to develop, pass, and implement the Secure Choice Savings Program, which requires employers with more than 25 employees that have been in existence for two years and don’t currently offer a retirement savings plan to automatically enroll workers into an individual retirement account.  The workers have the option to opt-out.

This campaign began by creating detailed applied research.  In September 2012, Woodstock published Coming Up Short: The Scope of Retirement Insecurity Among Illinois Workers.  The report observed that, nationally, only 49.1 percent of private-sector workers between the ages of 21 and 64 had access to an employment-based retirement plan.  A policy brief published by Woodstock in April 2012 revealed that 2.5 million Illinois workers did not have access to an employment-based retirement plan.  As a consequence, millions of Illinoisans faced the prospect of outliving their savings, assuming they had any.

 

The report recommended the establishment of a state program whereby employees would be automatically enrolled in a retirement savings account.  As reflected in our Theory of Change model, the next step was coalition building and outreach.  Woodstock joined forces with the Sargent Shriver National Center on Poverty Law, Heartland Alliance for Human Needs & Human Rights, and the Illinois Asset Building Group to develop a legislative proposal and to build a coalition to help promote awareness of and support for the policy.  Some of the early coalition members included AARP, Center for Economic Progress, Chicago Jobs Council, and Citizen Action/Illinois.  SEIU and AFSCME later became members of the coalition, and we were eventually successful in winning support among the business community.  Ariel Investments, Cabrera Capital, Small Business Majority, and the Illinois Black Chamber of Commerce became supporters of the campaign.

 

There were several conversations with stakeholders about the substance of the legislation, and these conversations led to changes to the policy proposal.  Initially, the program would have covered all businesses with more than 10 employees, but, based on the concerns of the industry, the threshold was changed to more than 25 employees.  The particular type of investment product into which employees would be enrolled was also changed.  Initially, the proposal would have enrolled employees into a traditional IRA, which imposes tax penalties for early withdrawals.  To avoid penalizing people who might need to tap into their retirement savings, the investment product was changed to a Roth IRA, which deducts taxes before the money is invested.  We also developed fact sheets showing the minimal burden that the program would create for employers.

 

With a strong coalition, we successfully advocated for passage of the bill in Springfield.  The bi-partisan bill passed the Illinois Senate with 18 co-sponsors and the Illinois House with 30 co-sponsors.  The bill was signed into law in January 2015.  We are now in the final stage of our Theory of Change model: Systems Change.  Woodstock is actively monitoring implementation of the new law, and has offered to provide State Treasurer Michael Frerichs with any assistance he might need to help ensure a successful roll-out.  Other states are considering similar initiatives based on Illinois’ law.  Accordingly, program implementation is particularly critical.  Illinois’s initiative could inspire the adoption of similar programs elsewhere, which could help millions more Americans build retirement security.  

 

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