Data and Research

Report Favors National Plan Over State Efforts

A research brief looks at efforts states are taking to fill the retirement plan coverage gap for private-sector employers and argues a national auto-IRA program would be more efficient.

By Rebecca Moore editors@plansponsor.com | February 25, 2016
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The Center for State and Local Government Excellence (SLGE) notes in an issue brief that the percentage of private-sector workers offered any type of employer-sponsored plan has not increased at all since 1979, according to Census Bureau data. The percentage is hovering just below 60%.

Since no legislative action has been taken to address this coverage gap, states have taken steps to do so. And President Obama, seeing no action on his national auto-IRA program proposals, last year ordered the Department of Labor (DOL) to issue guidance to help states in their efforts.

The first successful effort occurred in California; legislation enacted in 2012 established the California Secure Choice Retirement Savings Program. The program mandates employers to enroll participants in IRAs—avoiding employer subjection to Employee Retirement Income Security Act (ERISA) requirements—and precluded employer contributions to the program.

Since then three other states—Connecticut, Illinois, and Oregon—have also passed legislation following the auto-IRA model.  Connecticut has completed its feasibility study and will ask the legislature for approval to get the program up and running. Illinois does not have to go back to the legislature, but has not yet completed a feasibility study. Oregon started a little later, but is aiming at completing its study by the fall of 2016 and having its program up and running by 2017.

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