As a handful of states roll out employer-mandated retirement-savings programs for their workers, a group of researchers is now advocating for a nationwide policy,
arguing that a universal mandate could dramatically boost savings rates and ease the strain on federal assistance programs. “There’s a significant gap in
access to workplace retirement plans because employers in the United States are not required to offer a retirement savings plan to their employees, and we know that they
are much more likely to save if they have that access—as much as 15 times more likely,” said Angela Antonelli, executive director of Georgetown University’s
Center for Retirement Initiatives.
Her group partnered with Econsult Solutions to explore the potential impact of a nationwide mandate for employers to offer a retirement-savings vehicle using several
models with variables around the type of retirement account offered, exemptions for small employers, and whether or not to require employer contributions. But in any
scenario, they concluded that a mandate of some form would be dramatic, increasing the number of Americans saving for retirement by as many as 40 million.
The Georgetown center reports that some 46% percent of the private-sector workforce—57.3 million employees—don’t have access to a retirement plan
through their employer. Meantime, among older workers nearing retirement, 79% of the bottom quintile of earners have no retirement assets, while two-thirds of
millennials have little or no savings, according to the center.
Several states have been pursuing policies to help close that gap, with Oregon, California and Illinois each having already rolled out programs requiring most
employers to offer a retirement plan or to use one offered by the state. Those programs are all new, but state officials say that the early results are positive, with
savings rates, particularly among lower-income workers, on the rise. The new report, which does not endorse a specific model, nonetheless imagines participation in
retirement plans and savings rates soaring under a nationwide mandate. The researchers estimate that for a young worker who simply goes along with a plan’s default
contribution rate could retire with as much as $14,320 in annual income after 40 years. If Congress were to establish a refundable saver’s tax credit, that figure
would spike to $21,300 annually, according to the researchers.
You can find the full report and article here.