Illinois Secure Choice Board Approves Investment Policy Statement

Illinois Secure Choice Board members approved the investment policy statement of the Illinois Secure Choice auto-IRA program, establishing investment principles to guide the plan lawmakers have built for workers in the state without access to an employer-sponsored retirement benefit.    

By a unanimous vote Thursday, members approved the investment policy prioritizing four investment principles—low-cost investment options, open architecture, market performance, and simplicity—for the Illinois Secure Choice program.  

The purpose of the policy is to set forth the investment objectives of the Illinois Secure Choice Retirement Savings Program, in accordance with applicable law, establishing “policies and procedures to create the highest probability that these investment objectives are met in a prudent manner that is consistent with established guidelines for similar retirement savings programs, governing rules and regulations, and best practice standards adopted by the marketplace,” according to the statement.  

The default investment option for program participants is to enroll in a target-date-fund Roth IRA with a 5% contribution rate. Participants can choose to change their contribution level or fund option at any time.  

The Illinois policy specified that long-term investment offered to participants, including target-date funds and standalone investment funds will comprise of or be “constructed with funds that efficiently capture market returns” and will be invested in index funds, the policy stated.  

Contributions to Illinois Secure Choice will be directed by the participant to one or more of the available investment options, each composed of a designated mix of underlying investment funds or a single underlying investment fund. The Board will determine the investment parameters of each investment option, considering the financial characteristics of the investments, the policy states.   

The policy requires target-date funds to offer “an optimal, long-term diversified asset allocation strategy.” The policy divides the components for the target-date funds into the broad asset categories of: cash/money market funds; fixed income investments; real estate investment trusts; domestic equity investments; and international equity investments.    

The plan document also laid out responsibility of the board; the Illinois State Treasurer; and a to-be-selected external investment consultant.  

Secure Choice was rolled out to employers in waves.  

The law phased in employer onboarding by employer size, starting with companies of 500 or more employees when the program launched in 2018, stated a September press release. The deadline for the final onboarding group, Wave 5, employers with five or more employees, was November 1, 2023.  

As of October 31 plan data, 132,912 Illinois workers have enrolled in the state program and have saved more than $130.8 million for retirement. 

The board is responsible for the investment policy statement, choice of investment options offered to participants and administration of the Secure Choice assets. 

In addition to the investment responsibility, the board serves as a fiduciary to the plan.   

According to research from the Pew Charitable Trusts, as many as 56 million private sector workers lack access to a retirement savings plan through their jobs. States have stepped in, approving programs to provide workers with access to retirement plans. 

During the 2023 legislative sessions, at least 25 states and Washington, D.C. considered legislation to either establish new programs, amend existing programs or form study groups to examine options, according to data from the Georgetown Center for Retirement initiatives. Three new auto-IRA programs have been enacted this year—Minnesota, Nevada and Vermont—along with one new multiple employer plan in Missouri. 

A bill was reintroduced in Congress earlier this year to create a federal auto-IRA program that would be administered by the Treasury Department.