WASHINGTON—At least half of state governments in the United States are exploring or implementing programs to provide retirement savings options for private sector workers who do not have retirement plans through their employers, according to a report released today by The Pew Charitable Trusts. These state efforts—which are intended to increase savings during employees’ working years and reduce poverty among retirees—often require policymakers to balance multiple and sometimes conflicting priorities, the report found.
No major federal legislation to increase retirement savings has passed since the Pension Protection Act of 2006, so some state policymakers are looking for opportunities to fill the gap. Many states are considering what are essentially state-backed individual retirement accounts that build savings through regular deductions from workers’ paychecks. Illinois, Massachusetts, Oregon, and Washington have enacted such programs.
The report, “How States Are Working to Address the Retirement Savings Challenge: An Analysis of State-Sponsored Initiatives to Help Private Sector Workers Save,” examines efforts in 25 states. The research finds that:
“Many states are considering new options for increasing retirement savings, and early indications are that it’s feasible for them to take on this challenge,” said John Scott, director of Pew’s retirement savings project. “Interested policymakers must explore ways to maximize program effectiveness, minimize administrative and financial costs for employers, and manage states’ legal and financial risks. But these priorities can conflict and require consideration of difficult trade-offs, making the task of crafting proposals tougher.”
Pew’s analysis identifies and examines the approaches that states are taking and looks at the specific choices facing policymakers, such as costs; employers’ participation, responsibilities, and liabilities; and rules for employees’ enrollment, contributions, and withdrawals.
Previous research by Pew and others found that most Americans are not saving enough for their retirement years. According to multiple sources, more than 30 million full-time and 75 percent of part-time or seasonal employees do not have a retirement savings plan through their employer, and less than 10 percent of all workers contribute to a plan outside of work. Click here to download the full report.
The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Learn more at www.pewtrusts.org.