Philadelphia Proposes a City-Facilitated Retirement Plan for Private Sector

Philadelphia has taken steps to create the first city-facilitated retirement savings program in the United States for private businesses and their employees. Mayor Cherelle Parker signed legislation on Jan. 20 seeking voter approval to create a new nine-member city board that would oversee the 401(k)-style savings program, to be named PhillySaves.

If approved, the board would launch PhillySaves using an approach known as an automated individual retirement plan, or “auto-IRA.” Auto-IRAs essentially mimic 401(k) plans, except they are launched and overseen by a state or local government rather than an employer.

Participation would be mandatory but free for city-based businesses that don’t already offer a retirement benefit, that have at least one full-time or part-time payrolled employee, and that have been operating in Philadelphia for two or more years. The businesses’ only direct cost would be staff time to facilitate the transfer of employees’ money—usually through an existing payroll system—into a Roth IRA, which a private investment firm, overseen by the city board, would establish for employees.

All of the businesses’ employees would be enrolled automatically, although they could opt out if they wish. Employees could set the amount they want withheld from their pay, with a default of between 3% and 6%. And they would own their Roth IRA account and could freely move it to another workplace plan or withdraw the money, as Roth IRAs allow.

Philadelphia’s costs to set up the board, select an investment firm, obtain insurance, and oversee the system could run up to $1 million initially and approximately $500,000 each year afterward, according to The Pew Charitable Trusts’ retirement savings project, which provided technical assistance to the city.

As of late 2025, 17 states have enacted auto-IRAs with more than $2.7 billion in assets, covering 1.1 million employees and an estimated 359,000 businesses. Two cities—New York and Seattle—also approved auto-IRAs but later folded them into state-run plans. The commonwealth of Pennsylvania does not currently have an auto-IRA plan.

If voters approve creation of the board via a May 19 ballot question, Philadelphia’s mayor, City Council, and controller would proceed to appoint its members. The board would select an investment firm (or firms), conduct a public education campaign, and ensure that the system launches and operates as promised.

Philadelphia is among many cities and states with a growing population of older residents who have insufficient savings for retirement. Only 47% of Philadelphia households led by a person 65 or older have any retirement income other than federal Social Security, according to Pew research. And in 2023, an estimated 208,000 private sector workers in Philadelphia lacked access to a retirement plan through an employer.

John Scott is The Pew Charitable Trusts’ retirement savings project director, and Patrick Morgan is a senior officer with Pew’s Philadelphia research and policy initiative.